MRS Geraldine Gilligan yesterday won her case in the High Court which ruled that she was not liable for a tax bill of £1.6 million and that her husband, Mr John Gilligan, was obliged to make the tax return.
Mr Justice Morris, giving judgment, said it was clear that significant consequences" might flow from his determination of the issues. It was no part of his function to consider any such consequences. He confined his judgment to the issues before him, which were matters of law arising out of a consideration of the income tax code.
Mrs Gilligan, whose husband is being detained in England took her action following the seizure of property at the equestrian centre at Jessbrook House, Mucklon, Enfield, Co Kildare, by the Criminal Assets Bureau (CAB) last November.
The case was against CAB; Mr Barry Galvin, Inspector of Taxes and Chief Legal Officer, CAB; Mr Frank Lanigan, Revenue Sheriff for Co Kildare; and the Revenue Commissioners.
Mrs Gilligan claimed she was not chargeable person under the tax laws. The £1.6 million was estimated as the result of an assessment of "miscellaneous income" for the tax year ended April 1995.
Mr Justice Morris said the first issue was for the chargeable period, the 12 months ending April 5th, 1995, was Mrs Gilligan a chargeable person?
On behalf of Mrs Gilligan it was submitted that according to sections of the Income Tax Act 1967, in the case of a married couple, it was the husband and the husband alone who was the chargeable person and therefore Mrs Gilligan was not a chargeable person.
The Act provided that a wife's income was deemed for income tax purposes to be her husband's and not her own. Another section provided that either a husband or a wife might apply to have his or her income assessed separately". Mr and Mrs Gilligan had not.
The defendants submitted that under another section of the Act, chargeable persons were identified as being persons "receiving or entitled to the income in respect of which tax ... is to be charged". It was submitted that since Mrs Gilligan was a person who received or was entitled to receive the income, she was by virtue of this definition a chargeable person within the meaning of the code.
The Inspector of Taxes contended that the £1.6 million represented the receipts and/or the income of Mrs Gilligan.
The judge said that section 19 of the Act contained words which were clear and unambiguous. It provided that the husband was to be "assessed and charged to tax in respect of his wife's total income and that the wife's income "for all purposes of the Income Tax Acts... shall be deemed to be income of his".
Again, in a subsection, it was provided that the tax on the wife's income shall "instead of being assessed on her, be assessed on him".
The second part of the defendants' submission related to the obligation of a chargeable person to prepare and deliver to the Inspector a return in the prescribed form under the self assessment scheme.
The relevant dates were that the chargeable period was the 12 months ending April 5th, 1995. Mr and Mrs Gilligan lived as husband and wife for the 12 month period ending April 5th, 1995, i.e., during the entirety of the chargeable period". They separated in July, 1995.
It was the defendants' submission that, thereafter, Mrs Gilligan was obliged as the chargeable person to prepare and deliver to the Inspector on or before January 31st, 1996, a return in the prescribed form.
The judge referred to the definition of a chargeable person contained in the Finance Act 1967. He said it was clear that one only became a chargeable person where one was chargeable for tax in the relevant period. In this context the relevant period was the period during which Mr and Mrs Gilligan were living together as husband and wife.
He was of the view that Section 194 of the Income Tax Act rendered Mr Gilligan the chargeable person for that period and accordingly, he was satisfied that there was no obligation on Mrs Gilligan to comply with the obligations to prepare and deliver a return in the prescribed form to the Inspector.
Describing the background to the case, the judge said Mrs Gilligan originally applied to the High Court seeking an injunction restraining the CAB from advertising for sale or taking any steps to dispose of the property seized. This application was refused.
Mrs Gilligan then appealed to the Supreme Court who sent it back to the High Court to try the particular issues concerning whether Mrs Gilligan was a chargeable person.