THE chairman of the Revenue Commissioners has denied that any settlement was made with AIB which involved writing-off £86 million of DIRT tax.

Mr Dermot Quigley, speaking at a meeting of the Dail Public Accounts Committee yesterday, said that no "sweet deal" was done and no settlement was made. "No tax was written off," he said.

"The Revenue did not do any so-called sweet deal under which we accepted any money, let alone, a sum of £14 million from AIB in settlement of an alleged tax liability of £100 million," he said.

Referring to recent reports of contacts between the Revenue and AIB in 1991, he said: "The onus was on the bank to pay the appropriate amount and, in a subsequent contact with the bank, it indicated that additional DIRT payments had been made for a later year."

"The £14 million mentioned in recent articles would seem to refer to an alleged uplift in subsequent DIRT payments," he stated. He said this did not represent a "settlement" of £14 million.

He said the system for paying DIRT by financial institutions was "self-policing" and the Revenue could only act on real information, not speculation.

He said the Revenue was currently investigating "new information" which had come into its possession about the number of bogus non-resident accounts operating in AIB but did not have this information when assessing AIB's DIRT liabilities in 1991.

He added that the new information only came to light after a story appeared earlier this year in a Sunday newspaper. He told the committee that the Revenue Commissioners had received from AIB the audited material which appeared recently in Magill magazine and "are acting on it".

He said the current investigation would try to clarify AIB's outstanding tax liability Mr Quigley said the Revenue had "no idea about the scale of bogus non-resident accounts outlined in the media" and did not have sufficient powers to find out the true scale of bogus non-resident accounts.

Referring to a letter to AIB from Mr D. A. MacCarthaigh, a senior inspector with the Revenue Commissioners, published in Magill, which discussed AIB re-examining its non-resident accounts, Mr Quigley said the reporting of this in the media had been "taken out of context".

He said the letter to AIB was concerned with a "small number of accounts which could be counted on one or two hands" and was not a reference to the 53,000 bogus non-resident accounts later revealed in a Sunday newspaper. "He was trying to encourage the bank to come forward about specific cases," said Mr Quigley. He added that Mr MacCarthaigh was "trying to oil the wheels" of the bank's system and ensure it was improved in the future.

In the letter from Mr MacCarthaigh, reference was made to DIRT payments being negotiated "without penalty and without publication".

Mr Quigley said promises not to publish names "happens in particular cases" and is established in taxation law. He said it happened in this case because the number of bogus non-resident accounts which had come to the Revenue's attention at that stage was "extremely small".

He stated that the Revenue also had the power under taxation law to "mitigate" penalties and this was done with the small number of cases which were revealed before 1991.

He said that AIB seemed to have taken the view that any DIRT due retrospectively did not have to be paid. He said he disagreed with this and the Revenue would seek to recover any DIRT due, irrespective of when it was incurred.

He said other financial institutions were currently being investigated and as soon as the investigations were concluded, a report would be issued to the committee.