Revenue gets €9m in second highest tax settlement

A building group advised by a struck-off accountant, who is suspected of major tax fraud, has made a €9 million settlement with the Revenue Commissioners.

The latest tax defaulters' list shows that companies and executives in the Stanley Macadam construction group made a total settlement of €9.23 million with the Revenue Commissioners.

The settlement is the second largest in the history of the State. The bulk is made up of €5.33 million paid by Swanward Enterprises, one of the group's biggest companies.

Another two Stanley companies, Stanley, George, James and Raymond Partnership and Stanley Macadam Road Surfacing, respectively paid €2.3 million and €625,000. The directors, George, James and Raymond Stanley, individually settled for €118,000 each.

The settlements included interest and penalties and followed a Revenue audit. The group was advised by accountant Hugh Hannigan, formerly of Ballyknockan, Blessington, Co Wicklow, who fled the Republic in 2003.

Last March, the Revenue Commissioners told the High Court that they suspected Mr Hannigan of involvement in substantial tax evasion. The court ruled in his absence that he could not reduce his assets in the Republic below €1.1 million.

The Association of Chartered Certified Accountants (ACCA) has barred Mr Hannigan from membership, meaning he cannot act as an auditor in Ireland or Britain.

He has also given Northern Ireland's Department of Enterprise Trade and Investment an assurance that he will not act as a company director for six years, following the collapse of one of his companies, Newtownabbey, Co Antrim-based Braewoodline Ltd. This ban applies throughout the UK.

His problems with the authorities and professional regulators in the Republic and Northern Ireland were not connected with the work he was doing for the Stanley Macadam group. He was the group's auditor and advised it on its tax and financial affairs.

A high proportion of Stanley Macadam's liabilities are due to it using a VAT-avoidance scheme that the courts subsequently ruled was not legitimate.

Mr Hannigan advised the company to take advantage of the scheme, which was used mainly by housing developers, but the system itself was originally associated with accountancy firm Deloitte.

The scheme's failure to stand up in court led to a large number of companies returning an estimated total of €100 million in unpaid VAT to the Revenue. Many of them were clients of Deloitte, and sources say that the Revenue believes it is one of the scheme's main promoters.

However, Deloitte has said the scheme was widely used and that it was not the only accountancy firm advising clients to use it. Deloitte has no connection with Stanley Macadam.

The tax defaulters' list included a Carlow parish priest, Fr Philip O'Shea, who paid €92,305 in income tax, interest and penalties. The estate of the late John Guinness, former chairman of Guinness and Mahon Bank, settled for €116,000 in undeclared income and capital gains tax. This came from the Ansbacher investigation.

Wrights of Howth Export Kilmore Quay Ltd, paid €44,329 for undeclared PAYE and PRSI following a Revenue audit.

Excluding the €9.3 million settlement from Rathcoole, Co Dublin- based Stanley Macadam Road Surfacing and related entities, the biggest individual settlement was €1.04 million from Co Meath businessman Patrick Duff.

A shoe salesman and company director based in Kells, Mr Duff paid VAT and income tax of €266,893 and interest and penalties of €769,106 arising from the investigation into bogus non-resident accounts.

Some €8.99 million was collected from 73 defaulters as a result of the non-resident accounts investigation, which is now winding down.