The Revenue Commissioners should have appealed a tax bill against the Dunnes family trust to the High Court, given the "staggering" amount of money involved, the tribunal was told.
Christopher Clayton, a former senior official with the Revenue, was giving evidence about a £38.8 million capital gains tax bill raised against the Dunnes trust in 1986.
The Appeal Commissioners decided in November 1988 that no liability existed and the ruling was not appealed by the Revenue.
Mr Clayton, who was in charge of the capital gains tax section of the Revenue up to September 1986, when he was promoted, said the amount of money involved in the tax charge was "staggering" at the time.
Appealing would have cost very little - for £20 the Revenue could have sought a "case stated" from the Appeal Commissioners. This would probably have taken six months to a year to be prepared.
"It seems to me that the decision not to proceed to the High Court was taken somewhat hastily," Mr Clayton told James Connolly SC, for the Revenue.
He said the Revenue's senior counsel was not asked to draft formal advice on the issue. In a letter shown to the tribunal, Nial Fennelly SC said he was not surprised by the Appeal Commissioners' decision, given the way the case had gone. He wrote that he found it difficult to disagree with the opinion of the Appeal Commissioners.
Mr Connolly said the board of the Revenue at the time had consulted before deciding the case should not be appealed. Mr Clayton said there was no record of this process. "I remain of the opinion that if we went to the Supreme Court on this, we would have won," Mr Clayton said.
He said the Appeal Commissioners had been prepared to admit that they found the case difficult and that they were dealing with an area (trust law) with which they were not familiar. They had also mentioned that they expected the case to go further.
He told Hugh O'Neill SC, for the Dunne family trust, that such comments did not inspire confidence. Mr O'Neill put it to Mr Clayton that the issue before the commissioners involved trust law and not tax law, and so Mr Clayton, was not an expert.
Mr Clayton said it was his view that the key ruling made on the issue of whether a Dunnes trust was "revocable" was "nonsense".
He said that from 1985 until September 1988, when the case was heard, Mr Fennelly had expressed a view supporting the Revenue's case. He was not suggesting that Mr Fennelly's letter after the decision had been handed down, did not reflect Mr Fennelly's genuine view. However he, Mr Clayton, still had a "huge doubt" about the revocability issue.
Mr O'Neill: "You seem to be in a minority of one."
Mr Clayton: "That doesn't make me wrong." Others in the Revenue agreed with his view, he said.
Mr O'Neill listed the number of senior counsel and others who did not agree with Mr Clayton, including two of the three (unnamed) Appeal Commissioners.
Mr Clayton said "eminent people can be very wrong".
He said he believed the trust had a liability and so was the former chairman of the Revenue, Séamus Páircéir.
When asked if he was aware of anything wrong in the handling of the case by the Revenue, Mr Clayton said he was not aware of anything wrong in the handling of the case during the period he was involved.
He agreed with Mr Connolly that he was not aware of anyone objecting to the Revenue's decision not to appeal.
The tribunal resumes with a new witness today.
