Hospital consultants sue accountants after tax defaulter probe
Four medics issue legal proceedings against the firm that advised them
Published 18/12/2016 | 02:30
Four prominent hospital consultants who were billed for thousands of euro in unpaid taxes in a Revenue probe of the medical profession are suing the Dublin accountancy and consultancy firm that advised them.
The consultants, who were named on the Revenue Commissioner's tax defaulters list in the past two years, issued the proceedings against Houlihan Cushnahan Consulting Ltd, a firm based in Glasthule.
The accountancy firm is understood to have advised a large number of medical consultants on their tax affairs over the years. The consultants taking the legal actions are among 30 or so prominent medical professionals who were named as tax defaulters since the Revenue began probing a "tax planning strategy" that was being "promoted" within the medical profession.
The tax trawl has generated €54m in unpaid taxes from 253 hospital consultants and their related companies to date.
The tax affairs of more than 700 medical consultants were examined in the trawl and 322 cases remain open, according to the Revenue Commissioners.
The consultants who have issued proceedings are Professor Des Winters, a consultant surgeon at St Vincent's hospital in Dublin, who reached a €477,072 tax settlement for under declaration of income taxes following a Revenue audit. Kevin Cronin, a plastic surgeon who reached a €534,252 tax settlement following an audit, is suing.
Christine Jennings, a retired radiologist at the Blackrock Clinic, paid €432,355 following an audit. She instituted legal proceedings in 2015.
Michael Tolan, a cardiothoracic surgeon at the Hermitage Medical Clinic in Lucan, reached a settlement of €411,180 with the Revenue Commissioners.
The legal actions against Houlihan Cushnahan Consulting Ltd are recorded on the High Court list. The accountancy firm was contacted by this newspaper but declined to respond to queries.
The Revenue's trawl of medical consultants' tax affairs dates back to 2010, when officials became concerned about medical consultants setting up companies through which they routed their business. A report by the Comptroller and Auditor General published in September said that medical consultants were "being advised by their accountants" to set up companies as part of a "tax planning strategy".
According to the report, Revenue was concerned that "non-business expenditure" such as paying wages to underage family members, paying nannies and housekeepers were among the expense claims being made in some cases. It was concerned about personal motor expenses and travel costs.
It was also concerned about "deferred income", with the report saying that it was often found to be unjustified and in some cases the amounts were "often over-inflated".
The benefits of the company structure allowed the cheaper corporation tax rate of 12.5pc to apply to certain income routed through the company.
It was concerned also at the nature of the transactions between the consultant and the companies involved, and whether they reflected the commercial reality of the consultant's work.
Around 30 high-profile consultants were named as tax defaulters following audits, many more consultants are understood to have volunteered to settle their tax affairs in advance of an audit, avoiding disclosure of their names.