Powers to investigate were `very limited'

No inquiries appear to have been initiated by the Revenue Commissioners to ascertain how the former Taoiseach, Mr Charles Haughey…

No inquiries appear to have been initiated by the Revenue Commissioners to ascertain how the former Taoiseach, Mr Charles Haughey, accumulated funds to pay for various properties, the tribunal was told.

Mr Christopher Clayton, Chief Inspector of Taxes, said he believed if a major inquiry was launched into Mr Haughey it would have "run into a brick wall very rapidly".

He added that the Revenue's powers were "very, very limited" in the 1980s.

Mr Clayton agreed with counsel for the tribunal, Mr Jerry Healy SC, that Mr Haughey did not have income capable of supporting large borrowing but said Mr Haughey was known to have substantial assets and very substantial borrowing power based on these. He had been involved from the 1950s in land and property transactions.

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The tribunal also heard that the Revenue Commissioners threatened Mr Haughey with legal action over outstanding tax liabilities just days before he was appointed Taoiseach after the 1987 general election.

Mr Clayton said the collector general telephoned him on February 20th, 1987, and suggested he contact Mr Haughey's agents about the liability.

He telephoned the agent, Mr Pat Kenny of Haughey, Boland & Co, and made notes before the phone call of what he would say. "I wanted to remove any possible room for doubt as to what I was saying. After all, Mr Haughey had been involved in a general election on 13th February, 1987. He was expected to be elected Taoiseach on the 10th March. In effect, what I was doing was dunning Mr Haughey for a substantial sum of money," he said.

He told Mr Kenny the sum of £52,330, excluding interest, was owed. "As you know the tax liability in question has been handled sensitively and as quietly as possible on our side. We have no wish to change that position," he said.

However, he said given that the money had not been paid, court action was imminent. He said he appreciated Mr Haughey had been very busy.

"Nevertheless, the tax liability and its collection cannot be suspended by us and the realities of the collection process cannot be ignored on your side," he added. He sought a response within one week. The liability was eventually discharged by January 1998.

Mr Clayton said the capital gains tax liabilities were in respect of a £300,000 forfeited deposit paid by the Gallagher Group in respect of lands at Kinsealy and on income from the sale of a stud farm in Co Meath in 1977.