A farmer told the High Court yesterday he was advised by an AIB official that the 1988 tax amnesty could cost him "a good few quid" and not to avail of it. He alleges this was wrong advice and, as a result, he later had to pay a substantial tax bill.
Mr Michael Gayson, of Racecourse House, Racecourse Cross, Cashel, Co Tipperary, was giving evidence on the second day of his action against Allied Irish Banks for damages. He alleges that, had he availed of the amnesty, he would have had to pay £84,000 and not the £175,000 (which included penalties of £60,000) to the Revenue authorities which he was ultimately asked to pay.
AIB denies Mr Gayson's claims and alternatively pleads that a person guilty of illegality should not benefit from his own wrongdoing.
In evidence yesterday, Mr Gayson said he was left a 195-acre farm, where he had worked as a herder, in 1959. He had seven children. He opened an account with AIB and lodged money from time to time. In the 1970s, he looked to the then manager of the Cashel branch, Mr Denis Murphy, for advice.
In 1978, Mr Murphy suggested he would get a better rate in the bank's Belfast subsidiary, Mr Gayson said. About £60,000 was transferred to AIB Investment bank.
Mr Murphy had advised him to put any spare money into this trust for the children and that he would not be allowed to touch it. He was told it would be free of tax. In 1982, Mr Murphy felt they should bring the money back to Cashel. There had been no payments for third-level education for the first four children, who had secured good jobs.
Mr Gayson said he was not aware his funds had a false foreign residence address of "Glebe House, Epson Downs, England". He had only heard of that from his solicitors some months ago.
He said Mr Murphy had asked him in 1986 to come up with a foreign address and he gave his sister's address in Birmingham. Mr Murphy told him it was to get the bank over a technicality arising out of the Budget. In August 1988, when the tax amnesty was announced, he spoke to Ms Norrie O'Sullivan in the Cashel branch and asked whether there was anything in the amnesty for the family. He said Ms O'Sullivan said: "Why would you? It could still cost you a good few quid. I would not if I were you."
Mr Gayson said he was "pretty furious" when in 1991, a new manager, Mr Silke, said he was applying DIRT to Mr Gayson's fund. He had had no indication of interest paid from 1982 to 1986 and got a printed form which showed the bank had been paying him from 2.25 per cent to 4.5 per cent. He complained to Ms O'Sullivan who, he said, came back and said: "Yes, Michael, you have a good few quid coming to you." He was told it was £1,500 and he replied he wanted £5,000 in back interest. Ms O'Sullivan later telephoned him to say: "Okay, we have agreed to give you a once-off payment of £5,000" and the interest rate was increased to 9 per cent.
Mr Silke had told him he should have been paying DIRT for years. Mr Gayson said he had understood there were no taxes due on this money and Mr Silke had replied: "Oh yes, there is. There is new legislation and we are bound to do this." Mr Gayson said it was a shock, never mind a surprise to him. The hearing resumes on Tuesday.