The Revenue Commissioners have lost a legal attempt to prevent the immediate payout of €9 million in tax refunds to millionaire developer Robert "Pino" Harris arising from his expenditure on the luxury yacht, the Christina O.
The Revenue had argued that Mr Harris was not entitled to the refunds prior to the courts deciding legal issues relating to the interpretation of tax laws.
Dismissing the appeal, Mr Justice Hugh Geoghegan said that, given there was no provision in the Tax Acts which precluded a refund pending the determination of the proceedings at issue, the Revenue Commissioners were bound to effect such a refund.
He said the retention of excessive tax was unlawful and tantamount to an unjust enrichment of the Revenue Commissioners, at least for the period between a decision by the Appeal Commissioner in favour of Mr Harris and the ultimate determination of the legal issues by the High Court.
The proceedings arose after Mr Harris, in the income tax year to April 5th, 2001, claimed certain income tax reliefs arising from his status as a member of a limited partnership registered under the law of the Cook Islands, the Christina O Limited Partnership.
He said the partnership was established for the purpose of acquiring and operating high class luxury yachts and that, in the course of its business, the partnership acquired the luxury yacht, the Christina O.
In his tax return filed in January 2002, Mr Harris claimed relief for trading losses, capital allowances and interest arising from the purchase and refurbishment of the Christina O by the partnership.
In October 2004, the Appeal Commissioners decided Mr Harris was entitled to set off, against his entire income, capital allowances and interest payments arising from the partnership.
The Revenue Commissioners then asked the Appeal Commissioners to ask the High Court to determine a point of law in the case. Pending the High Court's decision, the Revenue argued that Mr Harris was not entitled to a refund of tax.
Mr Harris argued that he had been successful before the Appeal Commissioners and was entitled to be refunded from the making of the Appeal Commissioner's decision.
The High Court last March decided that a taxpayer is entitled to a tax refund consequent on a decision of the Appeal Commissioners in the taxpayer's favour, notwithstanding that the Revenue Commissioners' High Court proceedings regarding the point of law had yet to be decided. The proceedings turned on interpretation of provisions of the Taxes Consolidation Act 1997.
In that High Court judgment, Mr Justice Paul Gilligan held that, while the Revenue had a statutory entitlement to appeal the Appeal Commissioners' decision to the High Court, there was no provision, in the event of such an appeal being taken, for a stay to be placed on the payment out of money overpaid by Mr Harris. He held that Mr Harris was entitled to a refund of the monies.