The High Court has rejected an application by accountant Brian Murphy to stop a Revenue prosecution arising from a VAT repayment claim made by Securemed Ltd.
Murphy was an audit partner in Deloitte and a director and tax agent of Securemed. In April 2011, the company submitted a VAT return claiming a refund of €105,280. Murphy supplied three documents in support, including a €181,500 document attributed to Deloitte with a VAT element of €31,500.
Revenue later raised concerns about those documents. In December 2011, Deloitte partner Brian McDonald wrote to Revenue stating that the documents shown to him had not been drawn up or issued by Deloitte and that no such fees had been received.
Revenue formally notified Securemed of an audit in January 2012 and separately sent Murphy a copy as the company's tax agent. Revenue inquiries continued. In January 2013, Murphy was informed that an investigation had begun into his own tax affairs, after which a qualifying disclosure was no longer available. He later paid €102,000 towards Securemed's outstanding liabilities from money he said he had borrowed from AIB.
In February 2014, Murphy was summonsed on 11 alleged tax offences. He sought to prohibit that prosecution, prevent publication under tax legislation and quash Revenue's refusal to permit a qualifying disclosure.
His central argument was that Revenue's Code of Practice required him, as a director of a company under audit, to receive a separate audit notice. He said that failure deprived him of the chance to make a prompted qualifying disclosure, which could have prevented prosecution and publication.
Mr Justice Noonan rejected that argument. He held that legitimate expectation requires the loss of a tangible benefit in circumstances producing injustice. Murphy could not show that being subjected to a personal Revenue audit was itself a benefit. More importantly, he remained free to make an unprompted qualifying disclosure until the formal investigation began in January 2013.
The judge found no prejudice or unfairness and dismissed the application.