Mum in court over VAT irregularies at company

A mother of two could face repayments to Revenue in the region of €700,000 or a jail term, Sligo Circuit Court has heard.

Fiona Callaghan 49, Radharc Na hAbhainn, Coolaney, appeared before Sligo Circuit Court where she pleaded guilty to six sample charges of 31 counts, namely, delivering incorrect VAT returns, failing to remit VAT monies, and incorrect income tax returns.

The court heard that the penalty for each offence was €126,970 and a maximum five years in prison.

It was outlined that Callaghan ran a courier service FM Express, with her husband between 2002 and 2014 and the irregularities in VAT and tax returns came to light during a local validation check in July 2013.

Callaghan was the ‘assessable spouse’ and therefore responsible for filing tax returns and paying any tax due, and was registered for VAT through her own PPS number.

Her husband was employed by the business.

An inspection of books and records of one VAT return period between September and October 2012 showed that VAT returns did not tally with tax returns.

FM Express’ main customer was BWG Foods and it was discovered that the firm had filed VAT figures substantially more than Ms Callaghan had declared.

Following an investigation into records of FM Express and comparisons with BWG Foods files it was found that there was a VAT loss of €180,491 to the State and through further investigations it was found that there was also a loss of €109,210 in tax to the State, due to under declarations.

It became clear that VAT refunds were being claimed by FM Express but VAT on sales did not match gross income of the company.

A criminal investigation began on June 23rd, 2015, and Callaghan’s accountant Phylis O’Connor told investigators that she had never been given sales invoices or bank statements and that she worked off figures given to her by Callaghan.

The accountant detailed that she had carried out ‘adjustments’ upwards of figures given to her by Callaghan as she felt they were on the ‘ lower end’.

The court heard BWG Foods made payments for services via EFT (Electronic funds transfer) and this aided the investigation as it clearly set out how much was being paid.

Callaghan told Revenue that she gave all information to her accountant regarding tax and VAT returns, however, Ms O’Connor said this information was only provided to her after the validation check took place in July 2013 and that Callaghan had previously provided FM Express sales figures via hand written figures in lieu of bank statements.

When it was put to Ms Callaghan that VAT returns were incorrect, she said she could not say as she ‘didn’t fill them in’.

The court heard that as of last year the figure owed to Revenue, taking into consideration State interest applied, was at approximately €492,000.

It was noted that there are also civil proceedings pending.

Defending barrister, Mr Colm Smyth SC, said his client cooperated with the investigation and that there was no ‘fancy holidays, cars or trophy houses’ as a result of the under declarations.

The business employed eight people and had other contracts with the HSE and Nightline.

“She was attempting to keep business afloat in difficult times. Revenue had to take the hit.”Mr Smyth added that the matters had caused ‘considerable stress and shame’ to Callaghan and to her 15-yearold daughter who is worried her mother could go to prison.

It was outlined that €30 a month was being paid by the Callaghans in relation to a sum of €1,250 in the District Court. Mr Smyth said no meeting regarding repayments had been organised by Revenue.

Addressing the court, the mother of two apologised for the loss to Revenue.

She had been working part time but the court heard that due to the stress of these proceedings she could not continue it.

When asked by Judge Comerford how she would repay €700,000, considering she is currently paying back a €1,250 amount via €30 monthly repayments, Callaghan replied, ‘I don’t know’.

Mr Smyth said his client was ‘full of remorse’ for what happened and said she and her husband were prepared to work out a payment plan with Revenue.

Judge Comerford said though he took into account the upset caused to the Callaghans, he asked, ‘Why is this different than taking money from someone else’?

The Judge added that repayments of €30,000 per year across 20 years ‘might be feasible’. “She’s never going to reoffend again. A tight repayment schedule can sometimes be better than a prison term and is more beneficial to the state than prison,” suggested Mr Smyth.

Judge Comerford put the matters back to tomorrow ( Wednesday) for sentencing.