The Court of Criminal Appeal reduced John Hughes’s prison sentences for VAT evasion from four years to two years on each count, to run concurrently, after finding that the sentencing judge had substantially discounted his payments to Revenue and their effects on his life.
Hughes had pleaded guilty to six sample counts relating to failures to pay VAT or submit true and correct VAT returns. The offences were committed between July 2003 and February 2006 and concerned 119 used vehicles imported from the UK. The judgment said the vehicles were sold for €1.27 million and the VAT due was €226,718.
The court said Hughes had fraudulently used the VAT number of Rendon & Associates, a company where he had previously worked. The company had ceased trading and, the judgment said, had neither authorised the use of its VAT number nor known about the transactions. Hughes sold the vehicles to licensed dealers at VAT-inclusive prices.
After Revenue searched his home in November 2005, Hughes made payments totalling €252,000 towards tax, interest and penalties and paid €220,000 in proceeds from the sale of a French site to Revenue. He had also reached a separate €795,000 settlement for unpaid income tax and capital gains tax from earlier periods; a Revenue letter recorded that €685,000 had been paid. His total liabilities for the VAT case were still unresolved when he was sentenced.
Dublin Circuit Court imposed four-year terms on all six counts in March 2012, to run concurrently, and took the remaining counts into consideration. The judge acknowledged Hughes’s payments, guilty plea, good character, lack of previous convictions and prospects of rehabilitation, but said the offences warranted custody for punishment and deterrence.
On appeal, the court found no error in the judge’s consideration of those mitigating factors or in his treatment of the time between the offences and sentencing. It also said that paying tax, interest and penalties does not remove criminal responsibility, though financial reparation must be considered in sentencing.
The court found an error in the judge’s suggestion that taxpayers who make substantial payments are trying to “buy themselves away” from prison. It held that the payments and their damaging effects on Hughes’s finances, family life and ability to earn had been discounted too heavily. The court considered the original terms excessive, but said imprisonment remained warranted given the seriousness and dishonest organisation of the VAT evasion. It substituted two-year concurrent terms.