THE HIGH Court has ruled that the Revenue Commissioners were entitled to withhold €1.3 million due in VAT refunds to a company in the Cunningham group for the purpose of setting off those monies against tax liabilities of other companies in the group.
Mr Justice John Hedigan yesterday rejected arguments by Kanwell Developments Ltd, with registered offices at Upper Grand Canal Street, Dublin, that the Revenue had wrongly withheld VAT monies from it by setting off the monies against the tax liabilities of two other group companies, Mooreview Developments Ltd and Valebrook Developments Ltd.
He was giving his reserved judgment on proceedings by Kanwell against the Revenue aimed at securing the VAT monies.
Kanwell is part of the Cunningham group of building companies.
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 made VAT returns from December 1999 to December 2002, and claimed entitlement to repayment of some €1.3 million.
It accepted there were meetings between the group and Revenue in 2000, 2001 and 2002 aimed at arranging a "set-off" of payments against liabilities within the group, and that it agreed to a set-off of some €320,000 due to Kanwell against liabilities of Mooreview and Valebrook. However, it argued there was no legal authority for that.
It also claimed, even if a set-off was done by agreement, any authority to do so ended after September 2002 when, it claimed, it withdrew any authority that might have existed.
Mr Justice Hedigan said the dispute was whether Kanwell had asked for VAT refunds to be set off against the tax liabilities of the two group companies and, even if there was agreement on that, whether the Revenue needed statutory authority before it could set-off.
Having heard evidence from witnesses for both sides, the judge said he considered the evidence from John Kelly of the Revenue to be the most authoritative.
The judge concluded the set-offs made up to July/August 2002 were at Kanwell's request and were authorised by it.
