‘Gift’ row couple face €1m legal and tax bill
A COUPLE, who were told by a High Court judge to repay a €280,000 loan from a friend that they had claimed was ‘a gift’ are now faced with a potential €1m bill in legal fees on top of repaying the money owed to their friend, as well as to the Revenue Commissioners.
It has also emerged that solicitors are preparing to make legal moves to gain control of assets owned by husband and wife Jacqueline and John Keenaghan, so that their property can be sold over their heads and the proceeds used to repay Fidelma ‘Della’ Kerrigan.
Last month the Donegal-based husband and wife counsellors were ordered by the High Court to immediately pay back the €280,000 they had received from Ms Kerrigan in 2010.
And Justice Deirdre Murphy also ordered the Keenaghans to pay interest on the money they had received, as well as the entire legal costs of the seven-day court battle taken by Ms Kerrigan to force them to return the money.
A source revealed: ‘The legal costs of the court case are about €700,000 alone and they also have to pay back the €280,000 they got from Della Kerrigan, with interest.
‘An official from the Revenue Commissioners gave evidence in the case and it seems that the Keenaghans did not disclose to the taxman that they had received this money.
‘So, between what they owe in legal fees, and what they owe Della Kerrigan as well as any possible penalties and payments due to the tax man and social welfare, there won’t be much change out of a million.’
Fidelma ‘Della’ Kerrigan gave the Keenaghans the six-figure lump sum in August 2010. Two weeks earlier she had received a €750,000 compensation pay-out for injuries she had suffered in a car crash that claimed the life of her father.
Before receiving the money, former legal secretary Jacqueline Keenaghan told Ms Kerrigan that her architect husband had got into financial difficulties as clients owed him money.
However, documents lodged with the national property register in Dublin show that four months before getting €280,000 from Ms Kerrigan, the Keenaghans managed to get two mortgages from Allied Irish Banks in April 2010. Five months later – a month after receiving the money from Ms Kerrigan – they paid off these mortgages.
The couple live in a spacious home on the outskirts of Ballyshannon and the mortgages were secured on this land.
In 2004 Donegal County Council granted architect Mr Keenaghan conditional planning permission to build five houses on a site near the couple’s home.
Five years later, conditional planning permission was granted by the local authority to build four houses, but this was overturned in 2014 when Donegal County Council refused an application from Mr Keenaghan to build four houses on the site.
In this third planning application the architect sought a time extension to allow him to build the houses. If the Keenaghans fail to repay what they owe Ms Kerrigan, it is believed her legal team, Damien Tansey Solicitors, will register a mortgage judgment on this 2.5acre plot of land, which has considerable road frontage. If granted, the property could then be sold with the money raised given to Ms Kerrigan.
Meanwhile, the couple may separately face a considerable tax bill as it appears they never declared to the Revenue Commissioners that they had received a €280,000 gift or interest-free loan from Ms Kerrigan.
If the money was a gift the couple should have paid Capital Acquisitions Tax and the amount of CAT due depends on the relationship between those receiving the money and those giving the money. For example, parents can give a cash-free gift of €320,000 to a child, with tax liable on the sum over that limit.
However, if the person receiving the money is not a relative the threshold is €16,250, with 33% CAT tax liable on such sums greater than this.
Meanwhile, if the Revenue Commissioners deem the money given to the Keenaghans to be an interest-free loan there may also be considerable tax implications for the couple as a person receiving the loan in such circumstances is regarded as receiving
‘Legal costs are about €700,000 alone’
an annual gift and a 33% rate of tax can apply.
Last month, the High Court ruled that the money given to the Keenaghans was not an ‘unsolicited gift’, but a loan given with an unspecified repayment date.