Haughey family agrees to pay euro5m tax bill

The Haughey family is to fund a €5 million gift tax bill which has been agreed with the Revenue Commissioners arising from payments to Mr Charles Haughey discovered by the Moriarty (Payments to Politicians) Tribunal.

The €5 million tax, interest and penalties bill comes on top of a €1,281,718 settlement Mr Haughey made in 2000 arising from the payments to him discovered by the McCracken (Dunnes Payments) Tribunal. The total tax bill arising from the two tribunals for Mr Haughey is, therefore, €6,281,718.

The Moriarty tribunal is still sitting but has not discovered a new payment to Mr Haughey for some time. It is considered unlikely that it will discover fresh payments at this stage but, if it does, then a new tax bill could arise.

The Revenue has assured itself that the €5 million bill is capable of being funded from "Haughey family resources" and would not have signed off on the deal if it had not been certain the money was forthcoming, according to sources. The money is "in the process of being paid".

The tax bill comprises €2,470,000 in tax and €2,530,000 in interest and penalties. It follows long and complex negotiations between Revenue officials and Mr Haughey's professional advisers, the Revenue said yesterday in an agreed statement.

Mr Haughey was represented by an accountant, Mr Des Peelo, and a tax consultant, Mr Paul Moore. The final details were negotiated in recent days and signed off on yesterday. A press statement issued yesterday with the consent of both parties said simply that Mr Haughey "has agreed to pay €5 million in settlement of outstanding tax liabilities".

Mr Haughey and his wife, Maureen, own their family home, Abbeville, and surrounding acres at Kinsealy, Co Dublin, but transferred the bulk of the 250-acre estate to their four children, including Mr Sean Haughey TD, in 1990. In 2000, 10 acres of the Kinsealy land were sold to developer Treasury Holdings for €7.62 million.

Negotiations between Mr Haughey and Treasury over the outright purchase of the Abbeville estate ended unsuccessfully late last year.

It is understood the major sticking point in the negotiations was Mr Haughey's demand that he be allowed live out the rest of his life in the mansion.

Negotiations with other developers are believed to have foundered on the same point. Recently a statement was issued by a public relations executive, Ms Mary Finan, on behalf of the Haughey family, denying a report that a deal had been done on the sale of the estate.

The current gift tax rate is 20 per cent, having been reduced from 40 per cent by the Minister for Finance, Mr McCreevy, during the lifetime of the last government.

The taxes charged to Mr Haughey would have been at the rate which applied at the time the gifts he received were paid over. All of these occurred in the years before the change introduced by Mr McCreevy, with most of the payments going back to the late 1980s and early 1990s.

Mr Haughey and his advisers successfully contested the tax bill against him which arose from the McCracken tribunal. There was a public outcry when the Appeals Commissioner reduced the bill to zero. The Revenue said it would challenge the ruling in the courts. Subsequent negotiations led to the €1.281 million settlement in April 2000.

The payments which have been discovered by the Moriarty tribunal include a loan from Guinness & Mahon bank paid for by the late Mr P.V. Doyle; payments made to assist Mr Haughey settle a €1.4 million debt with AIB; money which was lodged to accounts in his name in Guinness & Mahon bank in the 1980s and which he denied any knowledge of; and money which was in Ansbacher accounts identified as Mr Haughey's and the balances of which are known for the early and mid-1990s.