Revenue told of One51 patent use

THE USE of a patent on paint tin lids by Phillip Lynch’s One51 has been brought to the attention of the Revenue Commissioners by Minister for Finance Brian Lenihan.

Mr Lenihan was replying to a Dáil question from John O’Donoghue about €4.96 million in tax-free patent income that One51 routed through a number of companies, including companies outside the group, before approximately €2 million was paid to nine executives in 2008 and 2009.

At a recent annual meeting of the company, chief financial officer Alan Walsh said the scheme incorporated what was in essence a bonus scheme and that he had put it in place. It was also said the transactions had been approved by the company’s advisers.

Mr O'Donoghue brought some reports on the matter in The Irish Timesto Mr Lenihan's attention "where the use of patent schemes for paint tin lids were used for tax avoidance or evasion purposes" and asked if he would have the matter investigated.

Mr Lenihan, in response, said the newspaper reports dealt with concerns raised by certain shareholders in the company about aspects of a royalty payment made in respect of a patent.

“The Deputy raises the issue of possible tax avoidance or evasion. I am not in a position to comment on that aspect or on the tax affairs of the company in question, which are confidential to it and the Revenue Commissioners. I have, however, brought the Deputy’s question to the attention of the Revenue Commissioners.”

Mr Lenihan reviewed the tax law on the matter and said the patent income exemption scheme has been in place for over 30 years. If any abuses came to the attention of the Revenue which it was not in a position to deal with under existing law, he would have no hesitation in changing the law, he said.