Mum engaged in ‘VAT fraud’ is spared prison
A mother of one who had engaged in what a judge described as a very large scale VAT fraud at a company was spared an 18 month prison sentence in light of the fact she and her husband had come up with a proposed repayment plan to refund Revenue over €700,000.
Judge Francis Comerford told Fiona Callaghan at Sligo Circuit Court last Wednesday evening he had intended imposing an 18 month jail term but he had changed his mind in light of the proposal to pay Revenue €15,000 back a year.
This offer had been made by the defendant’s legal team to the court at 4pm, just minutes before the Judge was to pass sentence in the case having adjourned the matter from the week before for finalisation.
“I had decided up until 4pm on an immediate custodial sentence and there is now a change in factors that are decisive so I am now going to impose a suspended sentence,” said the Judge.
In order to finance the annual sum of €15,000, the accused and her husband, Martin intend making the amount up by changing the family car thus saving €420 in a monthly repayment, putting another €500 a month from a soon to be expired van lease to the amount while Mr Callaghan also intends working every Saturday to bring in extra cash.
Fiona Callaghan, Radharc Na hAbhainn, Coolaney, pleaded guilty to six sample charges of 31 counts, namely, delivering incorrect VAT returns, failing to remit VAT monies, and incorrect income tax returns over a five year period between 2008 and 2013 covering 14 VAT periods.
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.
Defending barrister, Mr Colm Smyth SC, with Mr Peter Finlay BL instructed by Ms Laura Spellman, solicitor 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. “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-year-old daughter who is worried her mother could go to prison.
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.
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.
Just before Judge Comerford was to pass sentence last Wednesday evening, Mr Smyth said the Callaghans were in a position to offer €15,000 a year in repayments to Revenue having thought carefully about the situation over the previous few days.
Judge Comerford said this made a very big difference to the situation.
Martin Callaghan (52) took to the witness box to say he had a meeting with the ‘accounts people’ and had identified areas which would make up €15,000 a year.
The changing of the family car to one where there was no finance and the ending of a van lease would result in €920 a month and he intended working on Saturdays as well.
His wife also hoped to go back working part-time.
He said they were prepared to make a weekly repayment to Revenue.
Ms Dara Foynes BL with State Solicitor Elisa McHugh, put it to Mr Callaghan that “it was all a bit last minute.”
Mr Callaghan agreed and said it should have been done before now.
Ms Foynes suggested that at €15,000 a year it would take a lone time to repay €706,000.
“I’m not denying that, I’m trying to make an effort here,” he replied.
Mr Callaghan agreed with Judge Comerford that no matter what orders he made, Revenue would still be able to go after his wife to collect the outstanding sum by other civil remedies.
Passing sentence, Judge Comerford said false returns were made and false amounts returned.
The initial outstanding sum was approximately €289,000 which he described as substantial and which had been taken effectively by fraud.
He said he was approaching the matter as another criminal case.
He said the fact the sum was so large, the offences were premediated over a five year period were aggravating factors though he added that it had not been a sophisticated fraud.
The Judge said the VAT and Income Tax returns did not tally and that may have triggered an audit and it was somewhat surprising that it had lasted so long.
Fraud like this would also always come out when there was a third party customer, he added.
Judge Comerford noted that the fraud wasn’t done to fund a luxurious lifestyle and that the monies were expended to keep the company going.
There was a guilty plea, she had co-operated and had led a blameless life up to this.
There was evidence of remorse according to the Probation Report and she was at low risk of re-offending.
The Judge said he was satisfied that a term of imprisonment would have had a profound effect on the defendant’s daughter, family and marriage.
He had intended imposed an 18 months jail term and to mitigate that “but not as much as she would have hoped for.”
There was now an offer of €15,000 a year in restitution.
Judge Comerford imposed an 18 month jail term, suspended on condition she keep the peace and be of good behaviour for three years.
Callaghan was also ordered to pay Revenue the sum of €15,000 a year for 12 years from January 2020 to January 2031.
The amount was to be paid in weekly amounts of €288.50, to begin immediately and possibly through the Revenue’s online service.