LOTTO HQ ‘TOLD WOMAN HOW TO CHEAT REVENUE’
Lawyer claims €3.4m winner was advised how to avoid gift tax
THE Revenue Commissioners are monitoring a court case involving a Lotto winner amid claims she was given advice on how tax could be avoided.
The case revolves around a €3.4million jackpot winner being sued by her stepson for a share of the prize – but the lawsuit could have major consequences for future winners.
Galway woman Mary Walsh is being sued for a sixth share of the prize. Stepson David Walsh claims his late father asked him to sign the back of the ticket in the presence of his stepmother.
However, Mrs Walsh maintains she was advised by the firm running the National Lottery at the time that getting family members to sign the ticket would mean she would avoid having to pay gift tax.
Syndicates are not liable for gift tax as the members are deemed to have a share in the tax-free winnings. Tax is liable
however on any winnings gifted by a winner or winners to someone else. Members of a syndicate are advised to sign the back of a ticket as proof they are entitled to a share.
In the extraordinary case, Mrs Walsh contends that she bought and owned the ticket and gave her stepson a choice between a house or €200,000 from the win.
Her contention that she was advised to have relatives sign the ticket in order to avoid gift tax has prompted a senator to express concern that Lotto representatives could have been in ‘breach of criminal law’.
Labour senator Kevin Humphreys said he has raised the matter with the Revenue which told him it would keep a watching brief on the case.
‘I am concerned that a licensed arm of the State would be giving tax avoidance advice, which is clearly against the spirit of the law, if this allegation is true,’ said Mr Murphy.
‘I have contacted the Revenue in relation to this and they have told me that they will be engaging counsel to attend the case.
‘If this advice was indeed given, there are questions to be answered by the National Lottery. The current operator of the licence must give guarantees that such a practice, if it happened, is not continuing, because if it does take place, it is a breach of the criminal law.’
David Walsh told the High Court this month he received written confirmation from Lotto HQ in August 2013 that he was part of a winning family syndicate of six including his Ballinsloe-based stepmother Mary Walsh and his father Peter Walsh.
Mrs Walsh has not yet testified to the court but is expected to do so when the hearing resumes on January 26 before Judge Richard Humphreys.
Her lawyers have already told the court she will argue that she was advised that allowing others to sign the back of the ticket would allow any gifts from the winnings to be tax-free.
Brian Fay, a company secretary of An Post, which then operated the Lotto, was unable to answer definitively whether such advice was given. Asked if An Post’s policy on giving advice to winners who contact it by phone, Mr Fay told the court on January 11: ‘I can’t say one way or the other what our policy is.’
He said the company’s legal officer ‘would be more familiar than I am’ with the policy.
The National Lottery said in a statement last night: ‘Due to ongoing court proceedings, the National Lottery cannot comment on the specifics of this individual case.
‘The National Lottery at all times works to ensure due process in our claims procedure, in accordance with our statutory and regulatory obligations.
‘The National Lottery does not provide professional financial advice directly to our winners but recommends they seek appropriate and independent advice.’
During the hearing, Mr Walsh referred to a letter sent to his solicitors from the National Lottery in 2013 confirming he was part of a six-person syndicate.
Mrs Walsh contends that she didn’t know she’d won the lottery until the Sunday night following the draw and that she rang Lotto HQ on the Monday for advice. But Mr Walsh claims that he signed the ticket on the Sunday morning in front of his father and stepmother, and that his late father told him: ‘You have nothing to worry about for the rest of your life.’
Expert witness Jacqueline McShane, an accountant, told the court on January 12 that had the €3.38million been divided equally as a six-person
‘I can’t say one way or the other’ ‘They would each have got €564k’
syndicate, they each would have received €564,000 tax-free. But Ms McShane explained that if Mary Walsh was the sole winner, she would be entitled to the whole jackpot herself – while anything she subsequently gave to the rest of her family would be subject to gift tax.
Ms McShane said the maximum gift any of the family members could have received taxfree in those circumstances could not have exceeded €335,000. The court heard that gifts ranging from €100,000 upwards were given to different family members.
Revenue said it could not legally make any comment in relation to specific cases.