The closure of one man's tax relief

Shane Coleman reports on the closing of a controversial tax relief in today’s Tribune.

Section 4 of the Finance Bill, published last week, ends the benefit-in-kind tax exemption on employer- provided art objects introduced by [Bertie] Ahern, as a late amendment to the 1994 Finance Act, despite opposition from the Department of Finance and the Revenue Commissioners.

This tax exemption became a major issue over a decade ago when the Sunday Tribune revealed the measure had benefited businessman Ken Rohan and that it was applied retrospectively for the previous 12 years, effectively neutralising any efforts to pursue Rohan for back taxes.

Ken Rohan, a multi-millionaire property developer, was tapped for donations to Fianna Fáil while Bertie Ahern was finance minister between 1992 and ’94. He owned a mansion in Wicklow known as Charville House. The mansion was built in 1797 and is described by the National Inventory of Architectural Heritage as “one of the most memorable country houses in Wicklow”. As you might imagine, it’s worth a few quid.

Over a number of years Rohan decorated the gaff with many pieces of period furniture, antiques and artworks using money from his company Airspace Investments. The items were therefore owned by Airspace but Rohan was benefiting personally from them. The Revenue Commissioners thus defined them as being a benefit-in-kind of Rohan’s employment by Airspace and sent him a tax bill for 12 percent of the items value and two years of their use. This amounted to €150,000 per annum. Rohan disputed the bill. He knew that Revenue knew if they got payment for two years they could seek payment for the other ten years which he had personally enjoyed and used items bought by Airspace.

He appealed against the Revenue Commissioners to the Appeal Commissioners and won his case. Revenue weren’t happy with the decision and tried again, this time billing him for two different years. Rohan appealed once more and started a lobbying campaign, getting the Irish Georgian Society, National Heritage Council, Bord Failte and even the Department of Arts, Culture, Heritage and the Gaeltacht to write to the finance minister and senior decision-makers on his behalf. The Georgian Society, strangely, claimed if such bill was to be paid then hundreds of priceless pieces of art would be lost to the country as their owners looked to export them. This was despite nothing new – legislation, procedures or calculation methods – actually being on the cards.

Rohan himself wrote to the Minister for Finance, Bertie Ahern, arguing along similar lines. He suggested an amendment be made to the up-coming Finance Bill which would allow owners of certain types of artworks, furniture and antiques to avail of full tax relief. He even went so far as to have his accountants draft the amendment, which he included in the letter to Ahern.

The officials in Finance and Revenue weren’t impressed. Revenue sent correspondence to Ahern’s office outlining why exactly such items should be defined as benefit-in-kind. Finance then drafted a response to Rohan saying, to paraphrase, “you’re having us on, right? Pay up.”

Before sending the letter to Rohan the Finance officials gave it to Ahern to sign. Ahern drew two lines across the pages and told the officials he wanted the legislation drawn up as, well, as requested by the multi-millionaire Fianna Fáil donor, Ken Rohan.

This was done as per the minister’s orders. Bizarrely, it included details that the tax relief should cover the twelve years previous to the legislation’s enactment. Retrospective coverage was almost completely unique to this tax relief.  It meant Revenue could not seek monies for any years over which Rohan benefited from use of items owned by Airspace. Essentially it tied their hands, they couldn’t do anything to get money from Rohan for the use of the items.

Few noticed the amendment at the time. A few years later Matt Cooper got word that there had been something afoot. He investigated the matter and found evidence of the events detailed above, which he published in the Sunday Tribune in early 1999. In May of that year Charlie McCreevy, then minister for finance, in response a written question from Michael Noonan said…

Around the same time, the Department of Arts, Culture, Heritage and the Gaeltacht wrote supporting the case and referring in particular to the case of one named individual. The individual concerned also wrote to the Minister in October 1993 seeking an amendment to the Finance Acts indicating that such a change would be doing a great service to Irish heritage and that there was a danger of persons moving works of art out of the country for sale. In January 1994, representations were forwarded by the Department of the Taoiseach from Bord Failte supporting the proposed change to the Finance Acts.

Having examined the matter and the representations received, the Minister decided that a suitable provision would be included in the Finance Bill to deal with such circumstances.

This provision was enacted as section 19 of the Finance Act, 1994, with the support of both sides of the House.

While the application of tax law is a matter for the Revenue Commissioners, I understand from the Revenue Commissioners that one taxpayer has applied for and benefited from the section since its introduction.

It appears, since the introduction of the tax relief and its closure, Ken Rohan was the only individual to which it applied. Matt Cooper reckons he saved €1.5m or so on what would have been a 12 year bill. It’s impossible to calculate how much he would have paid eventually had the relief not been implemented.

I have no idea where Ken Rohan is or what he is doing. Bertie Ahern is still sitting in the Dáil.

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There are further elements to this story, to find out more I recommend – once again – you read ‘Who Really Runs Ireland?‘ by Matt Cooper.