MICHAEL LOWRY'S statement to the Dail shows clearly that the former minister did not declare some income to the Revenue Commissioners. This in turn may prompt the Commissioners to ask whether he met all the rules to avail of the 1993 tax amnesty.
If they decide that he did not, then they may seek a full tax payment, including interest and penalties, on any income which he declared for the amnesty.
While Mr Lowry's original short statement on the matter said that the £208,000 payment for the extension to his house was a "credit facility" - and sources close to him suggested it was a loan - yesterday's statement says that this was not the case. The payment, according to the statement, was an advance on money he was due for work personally carried out for Dunnes Stores.
Mr Lowry says that because the amount he was due from Dunnes Stores remain in dispute, it was his "understanding" that the payment did not have to declare to the Revenue until the matter was fully agreed.
The wording of this section of his speech is important - after the affair broke, when Mr Lowry consulted his professional advisers, they no doubt told him that his "understanding" Was wrong.
Tax experts said last night that the Revenue Commissioners would have expected that the considerable income received from Dunnes be declared for tax, even if the final amount remained in dispute between the company and the former minister. Mr Lowry would have been expected to make a preliminary payment on the money he received.
Mr Lowry says he received payments personally from Dunnes for his work as a consultant, as well as payments made to his company, Streamline.
The Revenue Commissioners would look for full clarity in examining such arrangements and on the distinction between work done by Mr Lowry personally and work done by Streamline. Payments made to a company - and then on to a director - would be treated differently for tax purposes than payment made to a consultant.
The Revenue will also no doubt be looking for the names and addresses of Streamline employees paid cash bonuses totalling £12,500 "without deduction of tax".
This revelation also raises questions about the way Streamline was managed by Mr Lowry and the extraordinarily close relationship it had with Dunnes Stores.
The former minister reveals that he availed of the tax amnesty. But his failure to declare payments received from Dunnes for his house extension may lead the Revenue to re-examine this.
The amnesty itself referred to tax years up to April 1991. But in order to qualify for the amnesty, which was announced in the middle of 1993, the taxpayer must have filed a full and accurate declaration for the 1992/1993 tax year. It was during this tax year, that Mr Lowry received the £208,000 from Dunnes Stores, which he concedes was not declared for tax purposes.
If the Revenue Commissioners decide that Mr Lowry did not meet the rules for qualifying for the amnesty, then it would be open to them to seek full tax payments, including interest and penalties, for any income declared under the amnesty.
The amnesty excused taxpayers from all interest and penalties and levied a special low tax rate of 15 per cent on income. Tax experts say they do not know of any cases where individuals have been subsequently disallowed from availing of the amnesty, although the legislation on the matter seems clear.
Apart from all that, Mr Lowry has not paid all his residential, property tax. He says he declared the value of the house excluding the renovations for RPT purposes. The Revenue Commissioners are thus likely to seek back tax and penalties for this tax.
There are other extraordinary aspects to the whole affair. How could it be, for example, that Mr Lowry says he received £208,000 for his house renovations, while Dunnes says it paid the builder over £395,000? And the agreements between Mr Lowry and Mr Dunne were all verbal, which is why the whole issue is still in dispute.
In 1992, Mr Lowry says that in the knowledge that he was owed a substantial sum, "but in the absence of any discussion as to the amount involved", Mr Dunne offered to help pay for the refurbishment of his house. This suggests that the normal relationship between a company and its client, where work is done and invoices issued, simply did not exist.
Streamline has now signed a formal arrangement with Dunnes Stores. And Mr Lowry says he will meet all tax liabilities in full.
