Michael Lowry remortgaged his home when raising money to settle the tax debts of his refrigeration company, Garuda Ltd, the tribunal was told by a Revenue official.
In a meeting with tax agents in 2003, Revenue officials were told Mr Lowry and/or Garuda would not be able to fund the full tax bill then facing them.
The maximum they could raise was £1 million, the agents said. They had already paid £434,000 on account.
Aidan Nolan, principal officer with the investigations and prosecutions division of the Revenue, said that in November 1996 the Revenue began to investigate matters to do with Mr Lowry and Garuda.
The Revenue called to Faxhill Homes, the company that did some work on the Co Tipperary home of Mr Lowry, and found evidence that work valued at £395,107 had been carried out and was paid for by Dunnes Stores.
In March 1997 the Revenue set up a criminal investigation team to look into Mr Lowry's affairs. Mr Nolan was part of the team.
It was not until early 2002 that the Revenue got access to the books and records of Garuda, as they had been in the possession of an authorised officer in the Department of Enterprise, Trade and Employment, who had also been investigating Garuda. Having looked at the books, the Revenue decided there had been an underpayment of tax.
Mr Nolan was asked by senior counsel Jacqueline O'Brien, for the tribunal, why the payments from Dunnes Stores identified in the 1997 McCracken report had led to tax being levied on Garuda and not Mr Lowry.
Mr Nolan said invoices and cheques viewed by the Revenue in files from Dunnes Stores indicated the group was trading with Garuda.
In 2002 the Revenue interviewed Ben Dunne, who said Dunnes traded with Garuda and not with Mr Lowry personally. "We did not believe Mr Lowry was trading in his own right with Dunnes Stores," Mr Nolan said.
The only reason Dunnes had paid for the work on Mr Lowry's home was because of the trading relationship Dunnes had with Garuda, he added.
If the Revenue had decided Mr Lowry was working directly for Dunnes, then it could have been that the Revenue would seek the tax due from Dunnes, and not Mr Lowry. In PAYE cases where tax goes unpaid, the Revenue usually goes after the employer.
A large part of the unpaid tax sought from Garuda was for unpaid PAYE on payments to Mr Lowry.
Mr Nolan said that in March 1997, the Revenue had raised an assessment against Mr Lowry in relation to the tax year 1992/1993. This had been appealed to the Appeal Commissioners and adjourned pending developments in a criminal case against Mr Lowry.
Mr Nolan explained that under the 1993 tax amnesty, which was availed of by Mr Lowry, a person had to declare all appropriate income and make a correct return for 1992/1993. "Our view at the time was that Mr Lowry may not have made a correct return for 1992/1993," Mr Nolan said.
Mr Nolan continues his evidence tomorrow.
