Andrew McKeown BL

About this case:

• Citation:
  [2020] IEHC 496
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Ms Justice Niamh Hyland

Background

The proceedings brought by the Collector-General, Michael Gladney, concerned the entitlement of the Revenue Commissioners to recover the sum of €1,716,811.26 on foot of a summary summons.

In July 2015 Revenue issued a notice of assessment of tax payable to Peter McGregor Snr in respect of Value Added Tax in the amount of €1,530,315.00, being made up of an amount of €40,976 in respect of the period 1 September 2013 to 31 December 2013 and an amount of €1,489,339 in respect of the period 1 January 2014 to 31 December 2014.

The Value-added Tax Consolidation Act 2010 s.111 (as amended) sets out the procedure for recovery of VAT. Section 111(1) provides that where the inspector of taxes has reason to believe that an amount of tax is due and payable to the Revenue Commissioners by a person, the inspector may serve a notice on the person specifying the total amount so due and payable.

The Taxes Consolidation Act 1997 s.960C provides that tax due and payable under the Acts shall be due and payable to the Revenue Commissioners, and s.960D notes that such tax due and payable shall be treated as a debt due to the Minister for Finance for the benefit of the Central Fund.

Section 960 I (1) of the 1997 Act provides that any tax due and payable or any balance of such tax may be sued for and recovered by proceedings taken by the Collector-General in any court of competent jurisdiction.

In November 2016, Mr McGregor swore a replying affidavit, accepting that he might have a VAT liability in respect of a small number of motor vehicle sales but that that liability was a very small faction of the sum claimed in the proceedings.

He said that he did not know how Mr Gladney came to quantify his claim and that to defend the proceedings he would need discovery of the documentation on which Mr Gladney was relying. He averred he had a bona fide defence to the claim where he never made the volume of transactions meriting the sum claimed.

Revenue argued that the sum, identified in the Notice of Assessment, was due and payable and that all the necessary proofs were before the court.

Mr McGregor argued no proof had been adduced that Mr Gladney was, in fact, the Collector-General. That argument was grounded exclusively on the decision of Mr Justice Frank Clarke in Criminal Assets Bureau v JMcN [2017] IESC 30, where he held, in the context of CAB legislation permitting an officer of the Revenue Commissioners to bring proceedings in his or her own name, that the proceedings could not be maintained as there was insufficient proof that the plaintiff was authorised to bring the proceedings.

Mr McGregor said that he was entitled to further particulars of the debt and discovery in respect of same, and that he was entitled to obtain same to ascertain whether he had an arguable defence.

Case law

That argument, Ms Justice Niamh Hyland said, did not withstand the very clear line of case law rejecting similar arguments, particularly the Supreme Court decision of Deighan v Hearne [1990] 1 IR 499.

In Deighan, the Supreme Court considered the manner in which a taxpayer may contest an assessment carried out by Revenue, outside of the statutory code. In Gladney v di Murro [2017] IEHC 100, whilst dealing with assessments in respect of income tax, Mr Justice Tony Hunt considered the scope of matters that might be raised by a taxpayer in an application for summary judgment and commented that the scope of matters that may be properly raised by a taxpayer had been “conclusively determined” in Deighan.

In finding for Mr Gladney on that occasion, Mr Justice Hunt stated that summary judgment proceedings in respect of the claims made by Revenue are different to summary claims brought by other plaintiffs. Referencing the case of T.J v the Criminal Assets Bureau [2008] IEHC 168, he observed that the whole structure of the Irish taxation system is developed on the basis of self-assessment, and “that the whole basis of self-assessment would be undermined if, having made a return which is not accepted by the Revenue, a taxpayer was entitled to access all relevant information that was available to the Revenue”.

He saw “no practical reason why the defendant could not attempt to discharge the burden of proving that the assessed tax is not payable in a hearing before the Appeal Commissioners. I do not believe that a discovery order would be required to assist in that process.”

Ms Justice Hyland said that line of case law, not contested by Mr McGregor, makes it clear that defences to notices of assessment must be made exclusively within the statutory mechanism provided. Questions of calculation and documentation required by the taxpayer are questions that must be raised and dealt with within the context of the statutory appeal. Moreover, discovery is not appropriate in an application where under the system of self-assessment it is the taxpayer who is best placed to ascertain how much tax he owes to the Central Fund.

The court said that there was an explicit statutory basis authorising the Collector-General to bring proceedings to recover tax due and owing and where it has been pleaded in the Summary Summons, which was not controverted by Mr McGregor, that Mr Gladney is the Collector-General. “That plea is in my view a sufficient identification of Mr Gladney as the appropriate plaintiff and evidence is not required in that respect,” the judge said.

Conclusion

Accordingly, Mr McGregor’s affidavit failed to disclose any matters that could satisfy the threshold necessary for leave to defend.

The judge was satisfied that the amount in the Notice of Assessment became due and payable once the time to appeal expired. Mr McGregor not having established an arguable defence, the Mr Gladney was entitled to judgment in the sum of €1,716,811.26.