Managers with Allied Irish Banks were advised in 1991 that they were to ensure DIRT was paid on any accounts which were not genuine non-resident accounts, the High Court was told yesterday.
Mr Peter Silke, manager of AIB's branch at Cashel, Co Tipperary, was giving evidence in an action brought against AIB by one of its customers, Mr Michael Gayson (67), a farmer from Cashel.
Mr Gayson claims he got bad advice in 1988 when he was allegedly told by the assistant manager of the Cashel branch, Ms Norrie O'Sullivan, not to avail of the tax amnesty. Ms O'Sullivan claims she never advised Mr Gayson about the amnesty. Mr Gayson is suing the bank for damages.
Yesterday Mr Silke said that, during a 1991 "clean up" of non-resident accounts, there was an in-depth investigation of those accounts. Managers had been instructed that genuine non-resident accounts were exempt from DIRT.
He agreed with Mr Colm Allen SC, for AIB, that there was a recognition by the bank in 1991 of "a problem in this area".
Mr Silke said branch managers in the region were called to a meeting in Clonmel early in 1991. They were told of a tax amnesty in relation to non-resident accounts, and that if a non-resident account was not genuine, then tax had to be paid. Mr Silke said they got a list of non-resident accounts and set about removing the exemption from DIRT status. He had a meeting with customers, including Mr Gayson, to explain the position. Mr Gayson had been very annoyed and was concerned that the Revenue would find out about his "trust" account.
Mr Silke said Mr Gayson had not told him of a long-standing arrangement Mr Gayson had with the former Cashel branch manager, Mr Denis Murphy.
Mr Silke said Mr Gayson had asked him to omit the trust account from a form relating to the farm tax returns in May 1992, but he advised Mr Gayson no account could be omitted. Mr Gayson had said that if he went down he would not go down alone.
Mr Silke said the first he had heard of a letter written in June 1992 by the former manager, Mr Murphy, to Mr Gayson's accountant was in court last week. Mr Murphy, in the letter read to the court, recollected he dealt with Mr Gayson, who had emphasised the account was for the education and expenses of his children.
The hearing enters its eighth day today.