Mr Charles Haughey's children made him a gift of land at Kinsealy, Co Dublin, so he could settle his tax bill arising out of the McCracken tribunal.
The land had been given to the four children in 1989 by Mr Haughey.
The Revenue is in negotiation with Mr Haughey concerning any capital gains tax or gift tax bills which might arise as a result of the transfer.
Mr Brian McCabe, a principal officer with the Revenue's capital taxes branch, gave evidence about the raising of gift tax from Mr Haughey on payments totalling £1.3 million from Mr Ben Dunne and detailed in the McCracken report.
He said that during a conversation with Mr Haughey's agent, Mr Paul Moore, in December 1999, Mr Moore suggested the possibility of a settlement. Meetings took place in January, February and March of 2000, and the Revenue board was kept informed.
Mr Haughey's initial offer was £750,000 but was negotiated upwards. The final settlement involved an agreement as to how the debt would be paid, security from Mr Haughey's children and agreement on the issuing of a press release.
Mr Haughey's children agreed to gift to Mr Haughey lands at Kinsealy. They also agreed to give an indemnity to discharge the debt from the sale of land if no payment was received from their father.
Two parcels of land were sold, one directly by the children and another by Mr Haughey after it was gifted by them to him. Mr McCabe said he believed £6 million was secured, but he was not sure.
The gift tax owed by Mr Haughey and arising from his being given the land could be set against any capital gains tax bill which arose. Mr McCabe said there might be no gift tax bill and only a capital gains tax bill.
Mr Jerry Healy SC, for the tribunal, said there had been mention of nearby land being sold at £600,000 an acre. It was his calculation that this was more than 113 times the value put on Abbeville land by the Valuation Office in 1989, when 227 acres at Kinsealy was gifted by Mr Haughey to his children and valued at £1.2 million in total.
Mr McCabe said the land sold was zoned for development. He said the Revenue and the Valuation Office were different organisations.
Earlier Mr McCabe said he wrote seeking gift tax returns from Mr Haughey on August 28th, 1997, the day after the publication of the McCracken report. He sought information on all gifts and not just those detailed in the report.
In relation to the gifts detailed in the McCracken report, it was Mr Haughey's position that the money came from companies in the Dunnes Stores group and that Mr Ben Dunne was acting ultra vires. For that reason, and although Mr Haughey received and made use of the money, ownership of the gifts still resided with the companies.
It was Mr Haughey's position that he would not be liable for gift tax until all the shareholders of the companies concerned agreed to the transfer of the money. The situation was complicated by the involvement of offshore companies.
A settlement had since been agreed, but there was never any ruling as to whether returns should have been made by Mr Haughey. If a case was brought on charges of not filing returns, and was successful, the maximum penalty would be £11,000.
On a number of occasions Mr Moore informed Mr McCabe that his client had difficulty dealing with the Revenue's queries because the late Mr Des Traynor had dealt with Mr Haughey's affairs.
