A revenue official has rejected evidence by the former chief executive of ACC bank that there was an "understanding" that arrears of Deposit Interest Retention Tax (DIRT) would not be pursued.
Mr Denis O'Connell, of the Revenue, who attended a meeting with ACC officials in February 1993, told the DIRT inquiry that he said "nothing at the meeting which could be construed as policy". He added: "I clearly stated that the bank was the responsible person for operating the 1986 legislation and I cannot be accountable for an impression that was taken from that meeting."
Mr O'Connell conceded that he had no contemporaneous note of the meeting. Mr John McCloskey, chief executive from 1988 until this year, was not at the meeting, but he said the senior bank people and tax advisers present had been left with the "clear impression" that "if we put our house in order" the obligation to pay tax on accounts reclassified from non-resident to resident did not go back beyond that tax year.
Mr O'Connell said that in 1992, after the Greencore and Telecom scandals, he had been asked to review compliance in the semi-state sector. E and non-commercial agencies like Combat Poverty. Over a period of up to two years they reviewed more than 150 companies., and many of the reviews took just one hour.
He was not aware of the reclassification of accounts totalling £7.6 million. "No specific details of any irregularities were given to me, other than some discussion took place concerning multiple accounts in branches where only one declaration was held," he said.
Another Revenue officer, Mr Aidan Nolan, who was also at the meeting, said he considered the DIRT issue a "peripheral matter".
Mr Declan O'Neill, a tax adviser with Ernst and Young, who was at the meeting, said his notes showed that DIRT was not a side matter but that the bank was seeking to clean up the situation.
Mr Pat Rabbitte put it to Mr O'Neill that, as the bank's tax adviser, he "sat beside the deputy chief executive, who misled the Revenue Commissioners as to the problem being in the past, and you recorded it dutifully in your note". Mr O'Neill's note said there had been difficulties in the past but Mr Rabbitte said "there were massive difficulties in the present".
Mr Paul Smith, a tax adviser who also attended the meeting, said there was never any indication that the Revenue expected any settlement to be made on DIRT.
Mr John Hogan, managing partner and external auditor, Ernst & Young, said he had relied on the opinion of his colleagues in 1993 not to include any provision for DIRT liability in ACC's accounts that year.
Mr Rabbitte put it to him that he had a back tax liability of "God knows what order", for which there was no provision in the accounts, a decision based on the judgment that he had "effectively a write-off". Mr Hogan replied: "That was the judgment I reached, deputy."