Cunningham firm says €1.3m wrongly withheld by Revenue

KANWELL DEVELOPMENTS, a building company in the Cunningham group of companies, has argued before the High Court that the Revenue Commissioners wrongly withheld approximately €1.3 million allegedly due to it in VAT repayments by setting off that money against the liabilities of other companies within the group.

Kanwell has brought proceedings against the Revenue in which it is seeking declarations that there is no statutory basis for the Revenue setting off the VAT money against the liabilities of other Cunningham companies.

The case opened yesterday before Mr Justice John Hedigan and continues today.

Outlining the case, Conor Maguire SC, for Kanwell, said it is part of the Cunningham group of companies, which are involved in building and development.

In 1999, Kanwell was involved in a major building project in Salthill, Co Galway, for Salthill Properties, another Cunningham group company, involving the construction of 96 apartments, a pub, nightclub and other facilities.

Kanwell had made VAT returns from December 1999 to December 2002 and was claiming entitlement to repayment of some €1.3 million.

The Revenue had, however, said it was offsetting money due to Kanwell against the liabilities of other Cunningham companies, particularly Moorview Developments Ltd.

It was clear the Revenue had a concern about the payment of taxes of the group, Mr Maguire said.

The Revenue, in acting as it had, was "globalising the problem" and dealing with the companies in the group as if they were one.

The Revenue knew that, as far as Kanwell was concerned, it was due money in legitimate VAT reclaims, he added.

Mr Maguire said there were a number of meetings between the group and Revenue in 2000, 2001 and 2002 and correspondence was exchanged.

It was accepted this was aimed at arranging a "set-off" of payments against liabilities within the group but, Mr Maguire contended, this was against a background where there was no statutory entitlement to such a set-off.

His side accepted it had agreed to a set-off of some €320,000 due to Kanwell against liabilities of Mooreview and Valebrook but there was no legal authority for that, he said.

The case continues today.