Latest: Tax inspector never met with Michael Lowry to discuss investigation, trial told
The tax inspector in charge of the case against Independent TD Michael Lowry has accepted that he never met with the politician to discuss the investigation against him.
It is the State's case that Mr Lowry's company, Garuda Ltd, received Stg £248,624 (€372,000) in commission from Norpe OY, a refrigeration company based in Finland, in August 2002.
It is alleged that Mr Lowry arranged for this payment to be made to a third party, Kevin Phelan, residing in the Isle of Man, and therefore it didn't appear in the company accounts for that year, nor did he declare it as income. It is further alleged that the accounts were then falsified in 2007 to reflect that the payment was received in 2006.
Tim Lester, a tax inspector, who headed up the criminal prosecution against Mr Lowry and Garuda agreed with Michael O'Higgins SC, defending the TD, that attempts were made to meet his client to conduct an interview.
He accepted that a number of attempts were made and Mr Lowry suggested potential dates for meeting but he ultimately never questioned him.
Mr Lester said that once the investigation commenced and summons had been issued, he was advised that he should not interview Mr Lowry.
He confirmed that the file was sent to the Director of Public Prosecutions on September 30, 2013, and a supplementary report was submitted on November 14, 2013. Mr Lester confirmed that an individual's obligation to pay tax arises when money is earned.
He accepted a suggestion from Mr O'Higgins that the prosecution “are not in a position” to show when the commission of €372,000 was accrued and agreed that there is no documentation to reflect the receipt of the €372,000.
Mr O'Higgins said he accepted that if documents were missing, “it does not absolve an obligation to pay tax” but added that with no invoice relevant to the payment “it is impossible to determine when the money is earned”.
Mr Lester agreed with Patrick Treacy SC, defending Garuda, that an unsigned CT1(corporation tax) form was submitted to Revenue on October 3, 2003, and later processed.
He accepted that a faxed copy of this CT1 form, signed by Mr Lowry, and sent by his company to his accountants, BBT, on October 2, 2003, was an exhibit in the case.
Mr Lester agreed that Garuda is not charged with filing incorrect corporation tax for 2002, rather it is charged with filing an incorrect corporation tax for 2006.
In re-examination by Remy Farrell SC, prosecuting, Mr Lester confirmed that he carried out enquiries as to what happened when the €372,000 left Norpe OY.
He identified a “deposit advice” from a bank on the Isle of Man that showed that Stg £248,624 was received by the Glebe Trust by order of Norpe OY.
Mr Lester identified a letter dated November 2, 2010, and addressed to a K Phelan of Omagh, in Tyrone, asking Mr Phelan to confirm the relationship he had with Norpe OY and enquiring as to why Stg £248,624 was paid into the Glebe Trust by Norpe.
Mr Lowry (64) of Glenreigh, Holycross, Co. Tipperary, has pleaded not guilty at Dublin Circuit Criminal Court to four charges of filing incorrect tax returns on dates between August 2002 and August 2007 in relation to a sum of Stg £248,624 received by his company, Garuda Ltd, and one charge in relation to failing to keep a proper set of accounts on dates between 28 August, 2002 and August 3, 2007.
He further pleaded not guilty on behalf of Garuda Ltd to three similar charges in relation to the company's tax affairs and one charge of failing to keep a proper set of accounts on the same dates.
The prosecution has closed its case before Judge Martin Nolan and the trial continued in legal argument in the absence of the jury of eight men and three women.
The jury in the trial of independent TD Michael Lowry has heard how the TD denied at a previous hearing that he had a deliberately hidden a 2002 payment from his auditors.
It is the State's case that Mr Lowry's company, Garuda Ltd, received Stg £248,624 (€372,000) in commission from Norpe OY, a refrigeration company based in Finland, in August 2002.
It is alleged that Mr Lowry arranged for this payment to be made to a third party, Kevin Phelan, residing in the Isle of Man, and therefore it didn't appear in the company accounts for that year, nor did he declare it as income.
It is further alleged that the accounts were then falsified in 2007 to reflect that the payment was received in 2006.
The Dublin Circuit Criminal Court jury has been hearing the transcripts from an appeals commission at which Mr Lowry successfully challenged a €1.1 million tax bill raised against him personally and his company Garuda Ltd.
Transcripts from Mr Lowry's testimony before the appeals commission hearing in April 2015 were read out by Remy Farrell SC, prosecuting.
During his cross-examination by Revenue's lawyers, the TD refused to accept that the payment of €372,000 represented a salary paid to him by Garuda.
“I refute the suggestion that I 'constructed this situation' and that I made a profit from this transaction. It wasn't a salary to me or a payment to me. It was me calling in my director's loan at a time when I needed it,” Mr Lowry told the appeals commission.
“The nub of the issue is it should have been recorded in 2002 when it wasn't. I can be accused of all sorts of things but the bottom line is it was a genuine mistake,” he continued.
Mr Lowry told the hearing that nobody knew that the sum had been missed, but the minute he found out about in September 2006, he said “I moved to correct it” and he said he notified his accountants.
He accepted there was no invoice raised for the commission but said that was because Norpe didn't require it. He said Norpe looked for an authorisation from Garuda that the payment could be transferred to Kevin Phelan and “this was done to their satisfaction”.
His office provided Mr Phelan's details to Norpe and they facilitated the transfer.
Mr Lowry said Garuda was struggling in 2002 and he made “a personal plea to Frank Dunne” of Dunnes Stores to give him another 12 months “to see if I could help the company survive”.
“I knew it was bad and the reason it was very bad is because I wasn't looking after the company,” Mr Lowry continued.
He accepted a suggestion that had he properly accounted for the commission figure from Norpe, Garuda would not have recorded a loss in 2002, as it had done, but instead would have recorded a profit.
Mr Lowry told the hearing that the commission received should have been reflected in the director's loan account as money was owed back to him.
“I put money in. I took money out. I felt I was entitled to do that. I believed I was owed that money.”
“It wasn't a salary it was a repayment of money that I had lent to the company.” Mr Lowry continued before he agreed that he was saying that the only salary he received from the company that year was a figure of just over €59,000, which had been reflected in the 2002 accounts.
Mr Farrell told the jury that the appeals commissioners made their decision on June 10, 2015.
He said it was concluded that there was not enough evidence to support Revenue's determination that the €372,000 was an emolument, (a wage or salary), paid to Mr Lowry and that, therefore, the assessment which had been raised was incorrect. The assessment was reduced to nil, clearing both Mr Lowry's and Garuda's tax bill.
Mr Lowry (64) of Glenreigh, Holycross, Co. Tipperary, has pleaded not guilty to four charges of filing incorrect tax returns on dates between August 2002 and August 2007 in relation to the sum of Stg £248,624 received by his company, Garuda Ltd and one charge in relation to failing to keep a proper set of accounts on dates between 28 August, 2002 and August 3, 2007.
He further pleaded not guilty on behalf of Garuda Ltd to three similar charges in relation to the company's tax affairs and one charge of failing to keep a proper set of accounts on the same dates.
The trial continues before Judge Martin Nolan and a jury of eight men and three women.
