Fitzwilton had to pay Revenue £6,000 for Burke donation

Fitzwilton has made a payment of about £6,000 to the Revenue Commissioners because it incorrectly reduced its VAT payments in 1989 due to the way it accounted for its £30,000 payment to Mr Ray Burke.

The tax payment is understood to have been made recently, when Fitzwilton examined how it accounted for the payment.

The VAT credit was claimed in 1989 on the basis of an invoice for £30,000 given to Fitzwilton by Irish Printers. Originally, Fitzwilton agreed to pick up £30,000 in election printing costs on behalf of Fianna Fail for work undertaken by Irish Printers. Irish Printers issued an invoice for £30,000 to Fitzwilton, but in the event the money was paid directly to Mr Ray Burke.

However, it is understood that the Fitzwilton subsidiary, Rennicks, which paid the money at its parent's behest, wrote off the £30,000 as a business expense. This had the effect of lowering its VAT payments by about £6,300, given the 21 per cent VAT rate at the time.

Sources close to Fitzwilton said that when this issue came to light in its recent examination of the affair, it submitted the appropriate VAT payment to the Revenue.

It is not clear whether the Revenue will accept the payment, or will seek other penalties or interest, or whether there are outstanding issues relating to the impact of the payment on the company's Corporation Tax position.

The Revenue is currently looking at the system whereby companies "picked up" expenses on behalf of political parties, a common practice in the late 1980s. It appears that many of the companies wrote off the amounts as a business expense, thus incorrectly reducing their tax liabilities and that mechanisms were put in place by the political parties to facilitate this.

Fitzwilton, chaired by Dr Tony O'Reilly, also made a £5,000 contribution to former President, Mrs Mary Robinson's election campaign in 1990. This contribution was made through advertising company Quinn McDonnell Pattison (QMP). QMP is run by Mr Conor Quinn, who is Mr Ruairi Quinn's brother.

The £5,000 was paid on foot of an invoice issued by QMP to Fitzwilton. Sources close to Fitzwilton say that it did not claim a VAT credit on foot of this invoice and thus money was not owed to the Revenue.

In a statement yesterday, Mr Ruairi Quinn said that the invoice was issued as part-payment for work carried out for the Robinson campaign by QMP. Mr Conor Quinn was not available for comment yesterday evening. Mr Ruairi Quinn rejected a suggestion made by Magill publisher, Mr Vincent Browne, on RTE Radio "that bogus invoices were sent on foot of expenses which were not actually incurred" by the campaign.

Fitzwilton is understood to have paid a total of £84,000 in political contributions between 1989 and 1997, covering all the main political parties. A total of eight donations was involved. The £30,000 eventually paid to Mr Ray Burke is understood to have been the only one on which a VAT deduction was claimed, according to sources.