Offer on tax bill 'no use to Dunne family'

An offer from Revenue chairman Séamus Páircéir that a £38.8 million tax bill be reduced to £16 million, was of no use to the Dunne family, the tribunal was told.

Noel Fox said negotiations had been opened with Mr Páircéir to see if a figure could be arrived at for breaking up the Dunnes family trust so the shares it held could be given to the Dunne children.

The offer involved the trust paying a capital gains tax while it continued to retain the shares. Mr Fox said the trust had the opinion of five senior counsel to the effect that the trust would win its appeal against the tax bill.

"We went back to the Revenue [ Mr Páircéir] and said we're not going anywhere with £16 million. That's nonsense - but give us a figure for breaking up the trust." Nothing developed from the discussions, which involved Ben Dunne, Mr Fox and Mr Páircéir.

Mr Fox said a subsequent meeting in 1988 with Mr Páircéir's successor, Philip Curran, was to see if they could have another look at the issue of breaking up the trust. He could not recall much about the meeting.

He said that what was needed was a way of breaking up the trust without creating a tax bill that would "wound" the Dunnes enterprise.

Mr Fox said the annual discretionary trust tax levied on the trust was a levy on a trading company. The Commission on Taxation had recommended that the tax be allowed as an advance on gift or inheritance tax, but this was not done. The issue had been a "bone of contention".

"It was unjust. That is how we felt about it . . . It was an unjust law."

Mr Fox agreed with John Coughlan, senior counsel for the tribunal, that at some stage the trust would have to make an appointment of its assets and tax be paid.

Asked about a dispute the trust had with the Revenue concerning an agreement the trust claimed it had with the Revenue on income tax to be paid on dividends paid to the trust, Mr Fox said he had now changed his mind on the matter. "It is quite clear now that we didn't have an agreement and I'm sorry for any upset that might have caused people," he said.

The former head of the Dunnes Stores group, Mr Dunne, is scheduled to give evidence today. The former chairman of the Revenue, Mr Páircéir, is expected to give evidence tomorrow.