In a stunning turn of events, a tax adviser is now at the center of a legal battle over a €3.3 million back tax debacle.
The adviser, Kennelly Tax Advisers Ltd, is being accused of providing negligent advice that led to a former chairman and managing director being hit with the hefty tax bill.
The plaintiff, Damien Clancy, claims he was assured by the adviser that he wouldn’t be liable for Irish income tax on his international earnings.
However, it was later revealed that this information was false, leaving Clancy seeking justice through legal means.
The Allegations: Negligent Advice and the Back Tax Bill
The plaintiff alleges that the tax adviser provided negligent advice, leading to a back tax bill of €3.3 million.
According to the former chairman and MD of Aughinish Alumina, Damien Clancy, he sought advice from Kennelly Tax Advisers Ltd regarding Transborder Relief.
The plaintiff claims that the tax adviser assured him that he’d not be liable for Irish income tax on his international earnings.
However, Clancy later discovered that he wasn’t entitled to Transborder Relief due to conditions in the tax law.
Despite his queries, the tax adviser repeatedly reassured him that his tax affairs were in order.
In April 2019, Revenue queried Clancy’s tax returns for the years 2015-2017.
As a result of these alleged negligent advice and subsequent queries, Clancy now faces a back tax bill of €3.3 million, including interest and penalties.
Legal proceedings have been initiated against the tax adviser in the Commercial Court.
Background and Contracts: Damien Clancy’s Role and International Consulting
Damien Clancy joined Aughinish Alumina in 1979 as a chartered engineer. Later, he took on more work as an international consultant through a contract with Cypriot firm WW Alumina Trade Co Ltd.
Aughinish Alumina, originally owned by Glencore and later taken over by UC Rusal, went through a management team reorganization in 2013. This reorganization allowed Clancy to expand his role as an international consultant.
Under his contract with WW Alumina Trade Co Ltd, Clancy provided consulting services in various locations including Russia, Ukraine, China, and Brazil.
Clancy disclosed his income from the Cypriot company in his tax returns and believed he was eligible for Transborder Relief, which would reduce his tax liability. However, he later discovered that he wasn’t entitled to this relief due to conditions in tax law.
Despite his queries, Clancy claims that the tax adviser repeatedly assured him that his tax affairs were in order.
Tax Returns and Queries: Disclosure, Transborder Relief, and Reassurances
Despite his repeated queries, the tax adviser assured Clancy that his tax affairs were in order.
Clancy disclosed his income from the Cypriot company in his tax returns from 2013, and the tax payable was calculated based on the assumption that he was eligible for Transborder Relief.
However, Clancy later discovered that he wasn’t entitled to Transborder Relief due to conditions in tax law. Despite raising concerns about his eligibility, the tax adviser repeatedly reassured him that everything was fine.
In April 2019, Revenue queried Clancy’s tax returns for the years 2015-2017. This prompted Clancy to become aware of potential outstanding liability in relation to his Cyprus tax affairs.
Ultimately, this led to a demand from Revenue for a total of €3.3 million, including interest and penalties.
Settlement and Appeal: Cypriot Tax Authorities, Revenue, and the Tax Appeals Commission
In 2020, Clancy reached a settlement with the Cypriot tax authorities for the years 2016-2020. This settlement was expected to resolve any outstanding issues with Revenue, as advised by the defendant. In June 2022, based on the advice from the defendant, Clancy lodged an appeal with the Tax Appeals Commission.
However, in November 2022, Revenue sent a final demand for a higher tax bill, rejecting the certificate from the Cypriot authorities. In response, Clancy decided to appeal the decision and sought the assistance of the Tax Appeals Commission. The appeal is based on the advice provided by the defendant, who assured Clancy that the settlement would resolve his tax issues.
The purpose of the appeal is to challenge the higher tax bill demanded by Revenue.
New Tax Bill and Legal Proceedings: Demands, Unauthorized Settlement, and the Lawsuit
The tax adviser now faces a lawsuit over the unauthorized settlement and the demands for a new tax bill totaling €3.3 million.
Damien Clancy, the former chairman and MD of Aughinish Alumina, filed the lawsuit against Kennelly Tax Advisers Ltd. Clancy alleges that the adviser signed a settlement agreement without his authorization, resulting in the substantial tax bill.
The case has been entered into the Commercial Court and approved for further proceedings. Clancy claims that he wasn’t informed by the tax adviser that his case was before a tax appeals hearing, adding to his grievances.
Seeking legal advice, Clancy has taken legal action against the tax adviser to address the unauthorized settlement and the significant financial burden imposed upon him.
Conclusion
In a shocking turn of events, a tax adviser is now facing the consequences of their so-called ‘advice’ that has led to a hefty €3.3 million back tax bill.
It seems their expertise in evading Irish income tax on international earnings wasn’t quite up to par. Despite multiple reassurances, the plaintiff found themselves in hot water with Revenue and is now seeking justice through legal action.
It’s a classic case of ‘trust the experts’ gone horribly wrong.
