Dunnes won appeal against £30m tax bill from Revenue

The Dunne family trust had a £30 million tax bill dismissed following a three-day hearing before the Appeal Commissioners in 1988, sources have told The Irish Times.

The Office of the Revenue Commissioners was advised by senior counsel not to pursue an appeal to the Circuit Court. The assessment had been raised against the trust in 1986 or 1987.

The tax bill was raised because the Dunnes Settlement Trust had come to the end of its intended 21-year existence. The trust had been set up in March 1964 for a period of 21 years; at the end of the period, the trustees decided to have its life extended for a further 21 years.

If the Revenue had successfully argued that the trust should have been deemed to no longer exist, its value would have been considered disposed among its beneficiaries. The beneficiaries are the members of the Dunne family.

The £30 million tax bill would have been for Capital Gains Tax and, at the then prevailing rate of 40 per cent, this means the value put on the Dunnes group's assets at the time was £75 million.

Measures introduced in the 1984 and 1986 Finance Acts affected the tax bills which had to be paid by the trust. The 1984 Act introduced a once-off tax charge equal to 3 per cent of the value put on the trust. The 1986 measure introduced a tax charge of 1 per cent of value for each year thereafter.

It is understood the value put on the trust and, therefore, the size of the tax charge, was also appealed by the trust around 1987. The details of this are not known.

Mr Ben Dunne yesterday told the Moriarty tribunal that he first met Mr Charles Haughey around 1986. He had wanted to meet him and sought an introduction through Mr Noel Fox, whom he was aware knew Mr Haughey. Mr Fox is a member of the Dunne trust and a close adviser to Dunnes Stores.

The McCracken tribunal in 1997 investigated whether Dunnes Stores received any advantage as a result of Mr Dunne's payments to Mr Haughey. Apart from one event it found no evidence of any favours asked by Mr Dunne of Mr Haughey, or any attempts by Mr Haughey to use his influence to benefit Mr Dunne or his companies. The one event was a meeting Mr Haughey helped arrange for Mr Dunne with the then chairman of the Revenue Commissioners, Mr Philip Curran.

Mr Curran told the McCracken tribunal of being called to Mr Haughey's office in 1988. Mr Haughey told him "business was booming and Ben and the family were making an awful lot of money but that there was some problem they had about, I think it was the family trust and the question of capital acquisitions tax".

A meeting took place between Mr Dunne, Mr Curran and Mr Fox. Mr Dunne spoke about "accumulating tax in the trust" but was not precise. Mr Curran invited him to go away and prepare a submission, which would then be considered. This never happened.

Mr Justice McCracken found that, apart from arranging this meeting, no representations were made by Mr Haughey on behalf of Mr Dunne or the Dunnes group, and that there was no wrongful use of his position by Mr Haughey in this regard.