Tax refund was sought by Haughey in 1981

In April 1981 the then Taoiseach, Mr Charles Haughey sought a PAYE refund, the tribunal has heard. Mr Haughey's tax advisers at Haughey Boland & Co wrote to the Revenue on his behalf, claiming his income over the preceding number of years had produced a net loss.

He wanted the PAYE rebate to be set off against a bill for Capital Gains Tax (CGT) which arose from a sale some years earlier of a stud farm at Ashbourne, Co Meath. Mr Haughey's tax agents stated that for the years 1976-77 to 1980-81 his farming activities produced a loss of about £370,000.

Mr Padraig O Donghaile, then a district inspector, said two letters were received from Haughey Boland on April 16th, 1981. One concerned the farm accounts and the other a CGT bill which arose from the sale of Rath Stud, Ashbourne, in January 1977.

The letters claimed the gain on the £300,000 sale was just under £50,000, which made for a capital gains bill of £12,480. However, they requested that as farming losses exceeded other income, taxes paid should be refundable and be set off against CGT. The potential overpayment of taxes, through PAYE, was £13,868.

Mr O Donghaile told the tribunal that this request could be acceded to only if the farm losses were confirmed and were allowable. In the event, the losses were not allowed. The gain was the difference between the sale price for the farm and the valuation put on it for April 1974.

Mr O Donghaile requested a rate demand for 1974, sight of the contract for sale, and a 1974 auctioneer's valuation for the farm from Haughey Boland. He never received the documents.

Mr Christopher Clayton, then a senior inspector of taxes, said he was contacted by the Revenue chairman, Mr Seamus Pairceir, in May 1984 and told about a contract between the Gallagher Group and Mr Haughey and his wife Maureen.

The contract, dated 1980, purported to cover the sale of Abbeville land to the Gallagher Group and included a non-refundable deposit of £300,000.

Mr Clayton took charge of raising two CGT claims against Mr Haughey, one relating to the stud farm and the other, for £89,700, relating to the Gallagher deposit.

In July 1985, Haughey Boland was informed of assessments being raised in relation to both CGT issues. Mr Haughey appealed the assessments but later withdrew the appeals.

A first payment, of £50,000, was made in July 1986, which included the £12,480 in relation to the stud farm and a part payment of the debt due from the Gallagher deal.

In October 1986 a referral notice was signed in relation to the outstanding amount. In February 1987 Mr Clayton told Mr Pat Kenny, of Haughey Boland, that Mr Haughey should pay the outstanding amount before March 10th, the day he was due to be elected Taoiseach.

In July 1987 £25,000 was received and in January 1988 the balance, £27,330.

No interest or penalities were charged against Mr Haughey.