Revenue must heed Keane - institute

The president of the Irish Taxation Institute, Ms Suzanne Kelly, last night called on the Revenue Commissioners to heed criticism in a judgment from the Chief Justice.

The criticism concerned the Revenue's decision to pursue a VAT case to the Supreme Court.

Mr Justice Keane accused the Revenue of wasting taxpayers' money in an eight-year refusal to refund VAT paid by British shoe company Stylo Barratt when it acquired a shop and fittings in 1994.

He said that a number of precedents emerging from the Irish and European courts opposing the Revenue position raised questions about why the tax authorities continued to pursue a case that would, if successful, have reduced its tax take from VAT.

Ms Kelly said the "extremely unusual" judgment was a "timely reminder to the Revenue that cases where the principles have been decided should be reviewed and, if necessary, pulled".

She said that Mr Justice Keane was "essentially marking Revenue's card" and reminding the Revenue "that it was required to act in the public interest and bear in mind that its actions were funded out of the public purse".

However, a leading VAT accountant defended the Revenue's decision to pursue the case.

Mr Jim Somers, VAT partner at Ernst & Young, said the Revenue was largely justified in taking the case.

"European legislation is often slightly different to Irish legislation and the Revenue would certainly feel it was entitled to argue its case," he said.

He noted that Revenue was not in the habit of pursuing such cases through the courts. Only three VAT cases have reached the Supreme Court and just 18 have been heard in the High Court, Mr Somers said.

A spokesman for the Institute of Chartered Accountants in Ireland said the case was "not without precedent". "One might hope that it would lead to a rethink in Revenue in relation to the need to go through the courts, especially in pursuit of technical issues," he added.

The Institute of Certified Public Accountants said it had received a number of comments from members which indicated that, following the judgment, the Revenue should review its priorities, especially in relation to the diminution of service levels following its reorganisation.

The Revenue last night refused to comment on any aspect of the case or of Mr Justice Keane's criticism of its actions.

Ms Kelly said: "This is something the Revenue should be learning from, rather than running away from it."