Cantillon: no respite for Lowry despite election win

Independent Tipperary TD Michael Lowry's joy at the continued success of his political career may be tempered by the comprehensive nature of the High Court's refusal to put a stop to his prosecution for allegedly filing incorrect tax returns. The judgment by Mr Justice Seamus Noonan was lengthy and included a summary of the tax issues Lowry faces and how they stand.

The transaction at the heart of the matter concerns £248,624 (€372,000) that was due by Finnish refrigeration manufacturer Norpe to Lowry's company Garuda, trading as Streamline Enterprises. Lowry instructed that the money go to an account in the Isle of Man, controlled by Omagh businessman Kevin Phelan, and so it never went to Garuda. The Thurles company recorded a net loss for the year concerned, 2002, rather than the profit that it would have done if it had received the Norpe money.

Then, in 2007, for reasons that have not been explained, Lowry instructed his accountants to put the sum in to the Garuda books as income for 2006 and paid the associated corporation tax. Along the way a fake invoice was generated, though we do not know by whom.

In February 2013, the Sunday Independent disclosed the Norpe payment, and in November of that year the Revenue assessed Lowry for income tax. It also raised an assessment against Garuda in relation to related PAYE/PRSI. The combined value of the assessments was about €1 million.

In April last year the Appeal Commissioners shot down the assessments based on the decision that the Norpe payment was “misappropriated” from Garuda by Lowry and could not be classified as an emolument. As a result a so-called “schedule E” assessment could not be raised.

The decision is to go by way of a case stated to the High Court, but if the Revenue Commissioners lose, “they are still entitled to raise an assessment against [Lowry] under schedule D. Therefore it is not correct to say, as the applicant does, that he has no tax liability in respect of these funds,” the judge said.

Elsewhere in his judgment, shortly after a reference to the bogus invoice found in the Garuda premises, Mr Justice Noonan said: “This prosecution is about fraud and falsifying documents.”

Lowry is appealing. When the criminal trial will go ahead is not known.