The Revenue investigation into Dublin landlords Paul Howard and Una McClean, which led to tax bills against them of more than €3 million being confirmed by the High Court this week, began with a “good citizen” report to Revenue in 2009 outlining how the couple collected their rent in cash.
When Revenue began to investigate their tax affairs, the couple, who were involved in other business ventures as well as property investment, including the Clean City launderette in Dublin’s Talbot Street, were uncooperative. So Revenue used its powers to collect information from banks and other financial institutions, the collector general, Joseph Howley, said in an affidavit to the High Court in late 2021.
As well as details of accounts containing substantial amounts of money, Revenue was also supplied by the financial institutions with statements of affairs submitted by the couple in support of mortgage applications. The statements of affairs were significantly at variance with what the couple were declaring in their tax returns.
Revenue was also able to examine stamp duty returns on properties bought by the couple, and so ascertain the price they had paid for the houses and apartments they accumulated both before and after the property crash. Some of these properties were bought without mortgages.
The couple, who live with their children on Larkfield Avenue, Harold’s Cross, Dublin 6W, were described by a barrister acting for Revenue at a Tax Appeals Commission hearing in July 2021 as being involved in a “ploy” to frustrate the collection of tax, including selling properties in recent years while challenging tax assessments that had been made against them in 2015.
“We have become aware of a dissipation of assets,” Shelley Horan, for the Revenue Commissioners, told the hearing. “Property is being sold to frustrate [Revenue] because Revenue’s powers are limited until those assessments are confirmed.”
In November 2021, Mr Howard was the subject of a High Court injunction that prevented him from reducing his assets below €2.3 million while Revenue dealt with various legal challenges that had been raised by him and Ms McClean.
The application for the injunction was made without Mr Howard being placed on notice because of a “very real concern that the defendant will dissipate further assets if he was made aware of this application in advance”, the collector general said in his affidavit.
Mr Howley also said properties that had been sold by the couple in recent years had been purchased by parties that were related to each other, including an individual who had served time in jail for tax offences and who was linked to the estate agency involved in selling the properties.
The same agency was involved in trying to sell further properties that were on the market at the time of the injunction application, he said.
A history of the couple’s property investments in Dublin – and the sale of some of that property in the wake of Revenue issuing the couple with tax assessments – was set out in the decision of Appeal Commissioner Conor Kennedy, who found against the couple in August 2021. The sales over the period from 2018 to 2021 had netted the couple €1.59 million.
Mr Howard (52) bought his first property, a house at Parkhill Way, Tallaght, Dublin 24, for €45,000, when he was just 18 years old, he told the commission hearing.
“Some money was left from my father who passed. And then I got into the rental property and then I remortgaged, topped up, doing what I had to do, made some money,” he said.
“I invested in Turkey, declared myself non-resident, which I was told to do by the accountant. Went to Turkey, opened a business and made some money and brought it back here, and that’s where I’m at now.”
The house in Tallaght was sold in April 2021, for €325,000, according to Revenue.
The other properties purchased by the couple were as follows:
- An apartment at 52 Mountjoy Square, Dublin 2, bought by the couple in October 2003 for €210,000;
- A house on Larkfield Park, Harold’s Cross, bought in November 2003 for €313,000;
- An apartment at 35 Mountjoy Square bought in March 2004 for €165,000;
- A house on Larkfield Avenue, Harold’s Cross, bought in January 2005 for €415,000;
- An apartment at 55 Mountjoy Square bought in March 2008 for €255,000. In June 2021 they sold this apartment for the same price;
- Another apartment at 55 Mountjoy Square In April 2008 for €190,000, which they sold in May 2021 for €285,000;
- An apartment at 52 Mountjoy Square, for €180,000, in October 2008;
- In June 2011, Ms McClean acquired 61 Talbot Street at no cost according to the commissioner’s ruling;
- In May 2012, Mr Howard acquired another apartment at 55 Mountjoy Square, for €135,000, which he sold in November 2018, for €230,000;
- In April 2013, 60 Talbot Street was bought for €32,000 and in February 2019 it was sold for €500,000;
- In August 2013 an apartment at 52 Mountjoy Square was bought for €120,000.
Other than their family home on Larkfield Avenue, “all the other properties were rented”, Mr Kennedy said in his decision. “From a review of the [Howard’s] bank accounts, there was no evidence that any of the rental income derived from the rented properties was lodged into any bank account.”
During her questioning of Mr Howard, Ms Horan said Revenue’s investigations indicated that no mortgages were taken out to buy two of the Mountjoy Square apartments, the Larkfield Park property and the properties on Talbot Street.
“Did you take out mortgages for those properties?” she asked, to which Mr Howard responded: “For them, no.” Earlier he had said that mortgages were taken out on all the properties when purchased.
Between 2003 and 2014, Mr Howard, through a company called Key Investments, built and sold a number of villas in Turkey, making a profit of about €700,000, the hearing was told.
“What happened to that money, how did you use that money?” Mr Howard was asked. “Well, I sent it back to Ireland,” he replied.
He said money from Turkey was brought back in cash. “I would have brought cash back. If my family and friends was visiting, they would have brought cash back for me too.” When Ms Horan asked him where he kept the cash that was not lodged to bank accounts, he said that information was “private”.
When the commissioner asked Mr Howard to point to lodgements in his bank accounts of rent from his tenants, Mr Howard said: “Well sure, I had plenty of money in my account, I probably didn’t need to put more in, as you see, I kept the cash in my house, or whatever.”
Mr Howard agreed that an email sent by an unnamed party to Revenue’s “Good Citizen” anti-evasion service in 2009, describing how Mr Howard and Ms McClean collected rent from their tenants, was accurate.
There were two methods for paying rent, the email said. “The tenants leave the collective rent in an envelope in their respective apartments in the kitchen and Mr Howard lets himself in at the start of each month and personally picks it up, usually when the tenants are not present. And the second method, which some tenants use, is to go directly to Mr Howard’s business, Clean City [a launderette] on Talbot Street, on the 1st of every month and hand the rent in directly to the employee at the counter. The rent is then presumably passed on to either Ms McClean and Mr Howard.”
In his finding against Mr Howard, Mr Kennedy, the appeals commissioner, noted how the businessman had said he was resident in Turkey for much of the period covered by the assessments. Yet Mr Howard had been continually writing cheques on his Irish bank accounts, had children living here and confirmed, during his evidence, that he personally collected the rent from some of his tenants.
Revenue did not accept Mr Howard’s claim that he was tax resident in Turkey.
When Ms Horan was querying him about his claim that he had paid tax in Turkey, Mr Howard, while referring to one document, said it contained a reference to property tax on his holiday home in Turkey.
“Revenue weren’t aware that you had a holiday home in Turkey,” Ms Horan said. When did he buy it, and for how much? “It was a long time back, I don’t remember,” Mr Howard replied.
“In your statement of affairs, you didn’t reference any property in Turkey,” Mr Horan said. To which Mr Howard replied: “Okay.”
Later Mr Howard revealed that he and his family had a mobile home in France that they “probably” bought in 2018 but had since sold. “When did you sell it?” Ms Horan asked, to which Mr Howard replied “around 2021”. This year then, Ms Horan said. “No, sorry,” said Mr Howard. “We sold it in 2019. Roughly.”
In his affidavit to the injunction application in late 2021, Mr Howley said seven of Mr Howard’s properties were taken into receivership in 2018 on behalf of Promontoria Oyster, a fund that bought loans on the properties from Ulster Bank/First Active. However, he said, it appeared that Mr Howard and Ms McClean had since then cleared the debts associated with the properties.
The amounts transferred to clear the debts exceeded €735,000, according to the collector general. The payments followed “a sequence of contras, or unknown lodgements”, he said.
The collector general also said four of the properties sold by Mr Howard and Ms McClean had been bought by parties with a connection to each other.
The purchaser of one property was involved with the estate agency involved in all four sales and was linked to the purchasers of the other properties. The same man, Mr Howley said, was reported by The Irish Times as having been jailed for two years a decade ago in relation to unpaid tax on income of more than €4 million.
The same estate agency was involved in the then ongoing efforts to sell other properties owned by Mr Howard and Ms McClean.
The proceeds of only one of the four property sales Mr Howard and Ms McClean had completed had been identified as being lodged to a bank account known to be associated with them, Mr Howley said. More than €280,000 had been lodged to this account following the sale but almost all of it had then been withdrawn by way of a series of cash and ATM withdrawals, he told the court.
Earlier this week, the High Court dismissed a legal challenge from the couple to Revenue’s assessments and confirmed an assessment for tax and interest of €2.4 million against Mr Howard, and €625,513 against Ms McClean.
At the commission hearing in July 2021, Revenue barrister, Ms Horan, asked Mr Howard why it was that his bank accounts showed so few withdrawals for everyday family expenditures such as entertainment and leisure activities. “I live a boring life,” Howard replied.
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