A BUILDING firm is seeking to overturn a €19 million VAT assessment raised against it by the Revenue in relation to the sale of sites and land in Dublin.

The Revenue Commissioners yesterday failed in a bid to have the challenge brought by Menolly Homes Ltd transferred to the Commercial Court, which “fast-tracks” business disputes. A Revenue solicitor said the collection of tax in the current economic climate, once a liability becomes final and conclusive, “has become more of a concern”.

Ms Justice Mary Finlay Geoghegan said the case involved “a classic public law dispute” as to whether Menolly was accorded fair procedures in the raising of the assessment. She found it was not admissible under the Commercial Court rules and should be dealt with through the normal High Court process.

In its judicial review proceedings, Menolly claims its disposals of 1,600 house sites on the west Dublin/Meath border and of a €35 million land bank at Drynam Hall, Kinsealy, Dublin, did not attract VAT charges on grounds they involved short-term leases which are exempt from VAT.

The Revenue found the VAT scheme for the 1,600 sites proposed by Menolly failed under law while the scheme related to the land bank was designed to artificially trigger a negligible value of just €17,000 in VAT.

The Revenue’s tax inspector put the total amount of VAT due from both sites and land banks, between July 2001 and May 2004, at some €19.1 million. Menolly appealed this decision to the independent Appeals Commissioners claiming the tax inspector had not validly raised the tax assessment. It also sought to cross-examine the inspector on the assessment at a hearing which began nearly 2½ years ago.

Last May, the Appeals Commissioners refused Menolly’s application to cross-examine the inspector and the company then got permission from the High Court to judicially review that refusal on grounds it was not accorded fair procedures.

Gráinne Clohessy SC, for the Revenue, said the matter was urgent, was grounded on business documents and involved a substantial sum. The Revenue’s solicitor Etain Croasdell said the parties were at the end of a very complicated hearing (before the Appeals Commissioners) and it would be undesirable there should be significant delay because of the judicial review challenge.

Gerard Hogan SC, for Menolly, said it was also anxious to have the case decided but was neutral on the application to transfer it to the Commercial Court.