High Court dismisses interim application where statute renders tax assessments final and conclusive due to missed appeals.

Neutral Citation: [2017] IEHC 169

THE HIGH COURT

Record No. 2015/59R

Record No. 2015/60R

BETWEEN:

(1) MICHAEL GLADNEY

Plaintiff

AND

ANNINO FORTE

Defendant

(2) MICHAEL GLADNEY

Plaintiff

AND

CORRADO FORTE

Defendant

INTERIM JUDGMENT of Mr Justice Max Barrett delivered on 16th March, 2017.

1. Following a Revenue audit in which the Fortes (father and son) elected not to participate, the Revenue Commissioners demanded

estimated unpaid taxes of each of the Fortes by way of notices of assessment. The sums sought by the Revenue Commissioners are

vast, over €2.7m in the case of Mr Annino Forte, and over €2.5m in the case of Mr Corrado Forte. In the notices of assessment, the

Fortes were advised that they could appeal the assessments to the Appeals Commissioners. However, instead of bringing appeals to

the Appeals Commissioners, the Fortes, who appeared unrepresented before the court, decided that they would wait for the Revenue

Commissioners to sue them for the alleged taxes owing and then dispute the alleged tax liabilities in court. Unfortunately, under the

Tax Acts, the Fortes’ failure to bring appeals to the Appeals Commissioners has had the effect that the notices of assessment, and

the estimated liabilities identified therein, have become “final and conclusive”. This has the result that estimated tax liabilities that

have never properly been tested have become, through the operation of statute, liabilities that are fully and finally owing at law.[1]

[1] Under s.58(1) of the Taxes Consolidation Act 1997, inter alia, profits or gains are chargeable to tax, notwithstanding that at the

time the relevant tax assessment is made, (a) the source of same is not known to the inspector, (b) they are not known to the

inspector to have arisen wholly or partly from a lawful source or activity, or (c) they are known to the inspector to have arisen from

an unlawful source or activity. Under s.933(1) of the Act of 1997, “A person aggrieved by any assessment to income tax or

corporation tax made on that person by the inspector or such other officer as the Revenue Commissioners shall appoint in that

behalf…shall be entitled to appeal to the Appeals Commissioners on giving, within 30 days after the date of the notice of assessment,

notice in writing…”. Under s.933(6)(a) of the Act of the Act of 1997 “In default of notice of appeal by a person to whom notice of

assessment has been given, the assessment made on that person shall be final and conclusive.” It is this last provision which the

Revenue Commissioners rely upon as giving them an unassailable legal entitlement to such monies as they estimate to be owing to

them. Although there is provision in s.933(7) and (8) of the Act of 1997 for the bringing of a late appeal to the Appeals

Commissioners, s.933(9)(a) appears to preclude the bringing of a late appeal at this time, providing that “Where action for the

recovery of income tax or corporation tax charged by an assessment has been taken, being [inter alia] action by means of the

institution of proceedings in any court…neither subsection (7) nor subsection (8) shall apply in relation to that assessment until that

action has been completed.”

2. The Fortes have approached their dealings with the Revenue Commissioners in a manner that has been less than dispassionate, at

times imprudent, and not always polite. Yet, rightly or wrongly, the Fortes insist that they do not owe the entirety of the vast sums

for which the Revenue Commissioners now seek summary judgment. Statute, however, says that the assessments made by the

Revenue Commissioners are now “final and conclusive”.

3. Clearly, our system of government, which brings so many benefits (tangible and intangible) cannot function unless taxes are paid;

all taxes due ought to be paid; and to the extent that the Fortes have not paid their taxes they have no claim on the sympathies of

the court in this regard. However, the court is greatly concerned that it is effectively being asked to give summary judgment in

respect of estimated sums, the accuracy of which has never properly been tested, yet against which no defence can be raised

because statute has the effect that those sums are fully and finally owing and cannot be disputed; and all because a father and son

mistakenly assumed that when they came to being sued by the Revenue Commissioners for estimated tax liabilities, they could seek to

dispute those liabilities before an independent court of law. Shortly put, the court is concerned that were it to accede to the within

application at this time, it could make an order that is not reflective of reality and which would potentially effect a very great

injustice.

4. All the foregoing being so, the court would be grateful if counsel for the Revenue Commissioners would seek instructions as to

whether, not least in light of (1) the professionalism that the Revenue Commissioners customarily bring to bear in their actions, and

(2) the genuine confusion that appears to have existed between the Fortes, who appeared unrepresented in court, as to the

availability of a remedy via the courts in the event that they elected not to proceed with an appeal to the Appeals Commissioners:

(a) the Revenue Commissioners would consider undertaking a further special audit in all the circumstances arising; and/or (b) the

Revenue Commissioners would be satisfied for the court to remit this matter to them or to the Appeal Commissioners for a fresh

determination as to the liability presenting; and/or (c) the Revenue Commissioners would suggest to the court some other means of

advancing matters in light of the concerns expressed by the court.

5. The court must admit to a lingering concern as to whether the effective excision of judicial discretion from the adjudicative process

that has been achieved by the Taxes Acts (so that the court must effectively find estimated amounts, the quantum of which has

never properly been tested, to be owing) is legally proper. So, in the event that the Revenue Commissioners consider that they

cannot accede to any of the proposals aforesaid or conceive of an alternative means of advancing matters, in light of the concerns

that the court has expressed, the court may have to consider sending a case stated to the Court of Appeal for its guidance on the

issues perceived by the court to present.

6. The Fortes should note that, whatever the response of the Revenue Commissioners, the court will only adjourn these proceedings

to allow any form of fresh consideration of their affairs if they undertake that they will, following such adjournment, engage sensibly

with the Revenue Commissioners, something which, with every respect, they have not done to this time. The Fortes should also note

that, despite all of the foregoing, they may yet be held liable to pay such amounts as the Revenue Commissioners are now seeking, or

some other amount. Finally, the court would respectfully encourage the Fortes, if they have any spare funds available, to consider

seeking professional representation, even at this late stage.