The High Court refused a Revenue officer’s application to determine whether businessman Maurice Cohalan was liable for penalties over voluntary tax disclosures, finding that the seven years and seven months before proceedings began was inordinate and inexcusable. The court held that the balance of justice favoured Cohalan and refused the relief sought; it did not determine the amount of any penalty.
The application, brought under section 1077B(3) of the Taxes Consolidation Act 1997, concerned disclosures relating to the Glenbrook Trust and investments in single-premium life assurance products. The Revenue officer alleged that the disclosures were incorrect or incomplete and sought a determination of liability and, if applicable, the penalty amount.
Cohalan’s advisers disclosed untaxed professional earnings connected with the trust in 2003. In 2005, they sent Revenue a disclosure concerning the insurance products and a cheque for €157,865, describing it as full and final settlement of tax, interest and penalties. Revenue cashed the cheque. Cohalan argued that this settled his liabilities and that Revenue’s later action was barred by delay.
Revenue subsequently said Cohalan was ineligible for the 2005 disclosure scheme because he had previously made an offshore disclosure. In March 2007 it advised his accountants that the earlier settlement appeared incomplete and that increased penalties and publication would follow. Cohalan disputed the additional penalty. Revenue opinions on penalties followed in May 2010, an amended opinion was issued in December 2012, and the originating notice of motion was issued on 4 March 2013.
The court rejected Cohalan’s argument that cashing the cheque and failing to respond promptly created a binding settlement or a legitimate expectation that his tax affairs were concluded. It found that he was not entitled to the insurance-products scheme and had not been positively misled by Revenue.
On delay, the court identified three unexplained periods: 18 months from July 2005 to January 2007, three years and one month from April 2007 to May 2010, and two years and four months from August 2010 to December 2012. It found the overall delay inordinate and inexcusable. Although there was no risk to a fair trial or actual prejudice, the court considered the delay unfair and noted Cohalan’s changed economic circumstances. It concluded that the balance of justice favoured him and refused the relief sought.