The High Court found that Frank Hynes deliberately understated his income in tax returns for 2015 and 2016 and ruled that Revenue was entitled to orders imposing a €440,930.80 penalty and permitting its recovery from him.
The judgment was delivered by Mr Justice Brian O’Moore on 17 December 2021 in an application brought by Geraldine Kavanagh, a Revenue officer. The court was deciding Revenue’s motion under the Taxes Consolidation Act 1997. The penalty sought was 100% of the tax assessed on the understatements.
Revenue had amended Hynes’s assessments on 7 September 2018, assessing income tax of €361,137.02 for 2015 and €112,624.41 for 2016. The assessments were not appealed within the statutory period and had become final and conclusive. The court said this penalty application did not reopen that tax liability.
Revenue’s evidence was that Hynes declared no assessable income for either year, while his wife, with whom he was jointly assessed, declared no assessable income for 2015 and €7,920 for 2016. Revenue said it found substantial unexplained deposits in accounts associated with Hynes and his wife, and that Hynes had not adequately answered questions about them. Revenue also alleged he had not meaningfully cooperated with the audit and had made no qualifying disclosure.
The judge cited deposits including bank drafts of €215,000, €18,000 and €9,979.76 in 2015, and deposits of €150,000 and €5,172.48 in 2016. He found Hynes had understated income in both years and that the evidence strongly supported a deliberate understatement. He said the amounts, their payment into accounts in Hynes’s name, the contrast with the declared income and the absence of a meaningful explanation supported that conclusion. He applied the civil standard of proof.
Hynes did not swear an affidavit disputing the penalty motion and did not attend or have representation at the hearing on 6 December 2021. The judgment records that he had earlier sought to challenge the underlying tax liability, but the amended assessments were already final and conclusive; a separate summary judgment obtained by the Collector General was not appealed.
The court said there had been no full cooperation that could reduce the penalty. It found Revenue entitled to the orders sought under sections 1077B(3) and 1077C. It did not decide whether Hynes had alternatively made careless but not deliberate incorrect returns, saying that issue was unnecessary after its finding of deliberate understatement. The matter was listed for 12 January 2022 to address outstanding matters, including costs.