A Co Tipperary farmer who says he deposited money for his seven children with Allied Irish Banks over a 30-year period has alleged in the High Court that he had to pay a substantial tax bill because of wrong advice from the bank telling him not to avail of the 1988 tax amnesty.
Had he availed of the amnesty, he would have had to pay £84,000 to the Revenue Commissioners and not the £175,000 he had paid, Mr Michael Gayson claims.
He has taken proceedings against AIB for damages for alleged negligence. Mr Gayson, of Racecourse House, Racecourse Cross, Cashel, claims that, arising out of the advice he got from an AIB assistant manager, he had to pay £175,000 tax to the Revenue in 1992 including over £60,000 penalties and interest.
He alleged that had he availed of the tax amnesty, he would have paid £84,000. AIB denies Mr Gayson's claims and alternatively pleads that a person guilty of illegality should not benefit from his own wrongdoing.
In court yesterday, Mr David Hardiman SC, for Mr Gayson, said Mr Gayson deposited money with the Cashel branch of the bank from the 1960s which was invested with the bank in the North.
Mr Gayson had initiated this investment for his children. He was given to understand that an investment system could be set up for him and that this money would be safe from tax.
The funds were repatriated around 1982 and were then invested into accounts to which the bank attached a false foreign residence address. The account bore the correct name but a false address of "Epson" in England. The address was not provided by Mr Gayson, counsel said.
In August 1988 there was a tax amnesty and Mr Gayson called to the Cashel branch of the bank and asked the assistant manager, Ms Norrie O'Sullivan, for advice on whether the amnesty affected his investments and whether he should do something about it.
Mr Hardiman said he was told not to and that any involvement with the amnesty would involve a large and unwelcome payment which was not specified.
In 1986, two years before the tax amnesty and four years after the false address, the manager of the Cashel branch told Mr Gay son they needed a real address in England, Mr Hardiman said. Mr Gayson gave his sister's address in Birmingham.
In that transition from the bank-invented address to his "foreign" address, there arose part of the crux of the case because in 1991 the bank manager informed Mr Gayson that he was going to apply DIRT to his account.
Mr Gayson knew that DIRT was a tax taken by the bank at source. As a result it was found he had a tax liability going back to 1974.
The hearing continues today.