The accountant who was in charge of a 2007 audit on Independent TD Michael Lowry’s company has said the Independent TD informed him in 2013 that a 2006 payment should actually have been processed four years earlier.
Neale O’Hanlon, a chartered account who at the time was working for accountancy firm BBT, told Remy Farrell SC, prosecuting, that he received a letter signed by Mr Lowry in January 2007 instructing him to account for €372,000, a commission received from a Finnish refrigeration company, in the 2006 accounts.
The letter stated that while the payment from Norpe OY was paid directly to Mr Lowry, it was properly due to the company and therefore should be reflected in the 2006 accounts. It instructed Mr O’Hanlon to set the payment against the director’s loan.
Mr O’Hanlon said as a result of the letter the firm adjusted the accounts.
“Who made the adjustment?” Mr Farrell asked.
“I’d say it was probably me, yes,” Mr O’Hanlon replied.
Mr Lowry (64) of Glenreigh, Holycross, Co. Tipperary, has pleaded not guilty at Dublin Circuit Criminal Court to four charges of filing incorrect tax returns on dates between August 2002 and August 2007 in relation to a sum of Stg £248,624 received by his company, Garuda Ltd and one charge in relation to failing to keep a proper set of accounts on dates between 28 August 28th, 2002 and August 3rd, 2007.
He further pleaded not guilty on behalf of Garuda Ltd to three similar charges in relation to the company’s tax affairs and one charge of failing to keep a proper set of accounts on the same dates.
He agreed that a previous witness - and a colleague in BBT - Kevin Burke, was doing the legwork on the audit but said he didn’t did not recall bringing the letter to Mr Burke’s attention.
Mr O’Hanlon was referred to a Prepayments Lead Schedule and agreed that a figure of €372,000 written into the document was in his handwriting.
“It looks like it, yes,” Mr O’Hanlon confirmed, before he agreed that other journal entries also appeared to be in his handwriting.
He said he did not include the figure in the director’s loans for 2006 because he did not have “sufficient evidence about the transaction” and said it was dealt with in the 2007 accounts instead.
He agreed he met with Mr Lowry in 2013 after an investigation had been launched that March and said the TD informed him that the €372,000 was a 2002 transaction, rather than a 2006 one.
He told Mr Farrell had he realised it was a 2002 transaction when the accounts were being audited in 2007, it would have been dealt with differently in the accounts.
“The net position would have been the same,” Mr O’Hanlon said, before he added that it should not have been accounted for in the turnover for the company. He said he also would have amended the tax return for 2002 to reflect the €372,000 received.
Mr Lowry (64) of Glenreigh, Holycross, Co. Tipperary, has pleaded not guilty at Dublin Circuit Criminal Court to four charges of filing incorrect tax returns on dates between August 2002 and August 2007 in relation to a sum of Stg £248,624 received by his company, Garuda Ltd and one charge in relation to failing to keep a proper set of accounts on dates between 28 August 28th, 2002 and August 3rd, 2007.
He further pleaded not guilty on behalf of Garuda Ltd to three similar charges in relation to the company’s tax affairs and one charge of failing to keep a proper set of accounts on the same dates.
Mr O’Hanlon agreed with Michael O’Higgins SC, defending Mr Lowry, that had the €372,000 been processed in 2002 when it should have been, the company would have been paying corporation tax on €219,000 and returned about €48,000 to Revenue.
He accepted that instead, the company actually returned a pre-tax loss of €91,000 and therefore had no tax liability.
Mr O’Hanlon agreed that corporation tax was instead paid on the €372,000 in 2006, at a time when the tax rate was 3.5 per cent per cent lower than it had been in 2002. He confirmed this meant that Garuda paid about €10,000 less than it would have had it been returned correctly in 2002.
The witness confirmed that Revenue later re-assessed the company on the basis that it had underpaid corporation tax and issued it with a bill for €30,000 including a surcharge and penalties. He confirmed that this has since been paid.
Mr O’Hanlon confirmed that Revenue then also raised assessments against both Mr Lowry and Garuda in 2013 on this commission received in 2002. The jury previously heard that the total of the two assessments including a surcharge, penalties and fines amounted to €1.1 million.
Both Mr Lowry and Garuda challenged this at the appeals commission. The appeal was allowed and the tax liability assessed at zero for both.
The trial continues before Judge Martin Nolan and jury of eight men and four women.
The trial continues before Judge Martin Nolan and jury of eight men and four women.