C85 DPP -v- John Hughes [2012] IECCA 85 (29 November 2012)

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Cite as: [2012] IECCA 85

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Judgment Title: DPP -v- John Hughes

Neutral Citation: [2012] IECCA 85

Court of Criminal Appeal Record Number: 120/12

Date of Delivery: 29/11/2012

Court: Court of Criminal Appeal

Composition of Court: Fennelly J., de Valera J., White Michael J.

Judgment by: Fennelly J.

Status of Judgment: Approved

Judgments by
Link to Judgment
Fennelly J.
Allow Appeal Impose Sentence in Lieu

Outcome: Allow Appeal Impose Sentence in Lieu


Record No.: 120/20012

Fennelly J.
de Valera J.
Michael White J.








JUDGMENT of the Court of Criminal Appeal delivered by Mr. Justice Fennelly on the 29th day of November 2012.

1. This is an appeal against the severity of sentences of four years imprisonment imposed on the appellant by his Honour Judge Nolan in Dublin Circuit Court on 22nd March 2012.

2. The appellant had pleaded guilty to six counts on an indictment. The pleas were accepted by the Director on the basis that they were entered in respect of sample counts on that indictment. The offences all related to the failure to make returns in respect of or to pay value added tax (hereinafter “VAT”) contrary to Section 1078 of the Taxes Consolidation Act 1997, as amended.

3. Four counts alleged that the appellant had failed to pay VAT contrary to contrary to s. 1078(2)(i) and (3)(b) of the Taxes Consolidation Act 1997 as amended by s. 211 of the Finance Act 1999. Two counts alleged that the appellant had failed to furnish a true and correct return of VAT contrary to s. 1078(2)(ii)(g) and (3) of the Taxes Consolidation Act 1997 as amended by s. 211 of the Finance Act 1999 and s. 133(a) of the Finance Act, 2002.

4. The relevant facts of the case are as follows. The offences to which the appellant pleaded guilty were committed between July 2003 and February 2006. The offences involved the importation of 119 used motor vehicles on which VAT was not paid. The total value of the vehicles sold was €1.27 million. The VAT due on the sale of those vehicles amounted to € 226,718. In order to have purchased the vehicles at a zero VAT rate the appellant needed to be able to use an Irish VAT number. The appellant fraudulently used the VAT number of the company “Rendon & Associates”, a trading company by which he had been previously employed in 2001. It should be noted that “Rendon & Associates” had no knowledge of the activity of the appellant or of his fraudulent use of their VAT number. The company had been wound down in 2002.

5. A Revenue investigation was commenced in November 2005. The appellant’s residence was searched, in his presence, pursuant to a search warrant on 14th November 2005 and documentation was found, including a number of invoices from a UK company. These purported to show sales in the UK to a John O’Sullivan of Rendon & Associates at a zero VAT rate. Extensive documentation relating to the purchase of sterling drafts for payment to the UK company was also found. All this pointed to the appellant’s involvement in the trading of second hand vehicles imported from the UK. Revenue subsequently, following a mutual assistance request, discovered that the appellant had sold a large number of these imported cars to licensed dealers at a VAT inclusive price.

6. Rendon & Associates was a legitimate trading company to which a VAT number had been properly issued, but the company had ceased to trade in or around 2002. It was not involved in the motor trade. The appellant had worked for the company between April and December 2001. Rendon & Associates at no stage authorised the use of its VAT number in connection with car-importation transactions at issue. The appellant had applied for a VAT registration number in 2002, but, at least he so maintains, none was issued because the Revenue did not think his projected level of trading would require registration. The Revenue investigation also extended to the companies which had purchased the vehicles imported by the appellant. It was established that they had been sold on the basis that the price included VAT, i.e., that VAT was being paid.

7. Following the Revenue search in November 2005, the appellant sold his house, where he lived with his partner and children in France, in May 2006 and downgraded to an apartment. He made full disclosure of his assets. He sold a site in France. The proceeds of sale, €220,000, were paid over to the Revenue. He had earlier paid a sum of €32,000. At the date of the Circuit Court hearing, it remained unclear what his total liabilities for tax, interest and penalties would be. The matter was still pending before the Appeal Commissioners.

8. In addition to these VAT defaults, the appellant had to reach a very substantial settlement with the Revenue in respect of unpaid income tax and capital gains tax for periods prior to that covered by the indictment. The settlement was in the sum of €795,000 composed of €278,000 for tax and approximately €516,000 for interest and penalties. A letter was produced from the Revenue, confirming that the appellant had paid €685,000 of that amount. He had made a plea to the Revenue that he was unable to pay the balance.

9. There was an element of complaint on behalf of the appellant that he had returned to live in France at a time when he had been dealing with the Revenue and, to their knowledge, had a solicitor acting for him, but that, nonetheless, the Revenue caused a European Arrest Warrant to be issued, without notice to him that there were any criminal charges and thus, without giving him an opportunity to return voluntarily to the jurisdiction. In the event, he spent some twenty nights in prison in France, pending his surrender under the warrant. Upon his return, he was released on bail by the Circuit Court and has, at all times, observed the terms of his bail. He has lodged the sum of €50,000 by way of bail and has told the Revenue that that sum is also available to discharge his liabilities.

10. In short, the unpaid VAT amounted to €226,718. The appellant has made payments amounting to €252,000 to the Revenue covering tax, interest and penalties. Bail money, in the amount of €50,000 had been lodged by the appellant and that sum had been also offered as a payment towards his Revenue liability.

Plea in mitigation

11. Counsel for the appellant made a comprehensive plea in mitigation.

12. Firstly, he dealt with the personal circumstances of the appellant. He had very little recollection of doing exams at school and left with very limited literacy skills. He has been diagnosed as dyslexic. He has been employed variously as a barman, shop assistant and builder in Ireland and in Germany. With the benefit of a bequest, he purchased a property and went into the business of buying, doing up and selling properties. He commenced to trade in bicycles, motor bicycles and ultimately motor vehicles, the latter in the early to mid 2000’s.

13. The appellant is 56 years of age. He is the father of two children with whom he lives in France in company with his French partner. Separation from his children has been a severe issue for him. Ultimately, his bail conditions were altered to allow him to return to France on conditions.

14. The appellant’s good character was the subject of a number of impressive testimonials.

15. Counsel referred to his financial settlements with the revenue. He had made very substantial payments covering the full tax liability but with additional payments covering interest and penalties of over €400,000.

16. Counsel referred to authorities. He urged the court not to feel bound by the decision of this court in People(Director of Public Prosecutions) v Murray [2012] IECCA 60 (per Finnegan J.). That case concerned an elaborate and sophisticated fraud on the social welfare system and involved the use of multiple fraudulent fake identities including a substantial number of close family members. In that case, very little reparation had been made. Counsel submitted that the court should ignore aspects of the judgment making reference to the global financial crisis and the consequent enormous burden on the public purse, because the offences in the present case were committed at a different time.

17. Counsel cited People (Director of Public Prosecutions) v J(T) [unreported, Court of Criminal Appeal, 6th November 1996]. The Court recognised, in that case, that the lapse of time had the consequence that the appellant had been sentenced at a time when a very different climate of opinion prevailed from that which existed when his offences were committed. If the appellant had been prosecuted earlier, he claimed that he would have been likely to have received a significantly less severe sentence. He referred to the Revenue Commissioners Report for the year 2008 in support of the proposition that sentences for revenue offences were less severe a number of years ago. Counsel submitted that the court was bound to adopt the sentencing approach that would have applied if the appellant had been prosecuted expeditiously.

18. Counsel referred to People(Director of Public Prosecutions) v Perry [unreported, Court of Criminal Appeal, 29th of July 2009]. In that case a sentence of 20 months, imposed by the same trial judge as in the present case, had been the subject of an appeal to this Court, which effectively suspended the balance of the sentence. Counsel referred to the judgment delivered on the part of the Court by Hardiman J in that case.

19. Counsel also cited the judgment of Finlay C.J. in McLoughlin v Tuite [1989] I.R. 82 and the judgment of this Court in People(Director of Public Prosecutions) v Redmond [2001] 3 I.R. 390. He referred to the principle of proportionality in sentencing by reference to Professor O’Malley’s work, Sentencing Law and Practice 2nd Ed., (Thompson Round Hall Press, 2006)

20. Counsel referred to the evidence of the appellant's good character, his genuine expressions of remorse, his plea of guilty, the absence of any relevant previous convictions and the very large payments the appellant had made in respect of interest and penalties. As he expressed it, the appellant had "emptied the cupboard" to meet his obligations to the Revenue.

The sentence imposed

21. The learned trial judge, accepted counsel’s submission that the appellant had paid a substantial amount to the Revenue, but thought that he was still a little bit behind in paying the penalties and interest. He agreed that he must take into account the payments of substantial sums to the Revenue and that this must be interpreted as a type of punishment and penalty on the appellant.

22. He emphasised the seriousness of the offence of tax evasion.

23. The sentencing judge described what he believed to be the thinking of tax evaders in relation to their crime. “[I]t seems to me that all tax evaders attempt to evade tax and move on and if they move on without being caught they pocket the tax. It seems they take a chance and it seems to me the thought being if I am caught and brought before the courts, the only punishment that a person will suffer is a financial penalty. It seems this was the thinking and probably with justification in the past.”

24. He mentioned his own previous decision in People (Director of Public Prosecutions) v Perry but added that he had always felt he had been too lenient in that case, that his first instinct had been to impose a much more severe sentence.

25. He continues later to say: “I take the view that parties who do it [evade tax] take a chance and hope if the worst happens they can, as it were, buy themselves away or out of a custodial sentence.”

26. He noted that tax evasion was one crime that a custodial sentence might act as a great deterrent. He added:

      “I don't think it’s appropriate, it’s fair, to the people of this country who mostly pay their tax and it seems to me it's of very little deterrent quality to other taxpayers if that is the situation that essentially you buy your way out of a custodial sentence by saying to the Court, I've suffered enough, I've paid my penalties, I paid my interest and I've made a huge effort to do that. It seems to me that parties who engage in tax evasion, the last thing in the world they want to do is undergo a criminal sentence. It seems in other aspects of crime parties that appear before this Court all of the time seems to have no difficulty in undergoing criminal sentences but in this aspect it seems that custodial sentence has arrived rather late.”
27. The sentencing judge also considered the mitigating factors when sentencing. He noted that the appellant was unlikely to re-offend and was essentially fully rehabilitated. He considered that the appellant had made great attempts to pay, to deal with the Revenue and that he must be given credit for that. He spoke of the appellant’s good character and the fact that he had no previous convictions. He took the view that the appellant was unlikely to bother any Court in relation to future criminal offences. However he considered the offences to be of such a serious nature as to warrant a custodial sentence despite the many mitigating factors:
      “But I am left with the facts of the crime. He evaded to a large extent and he must pay for that as a matter of punishment and deterrence to other parties who might think of going down this road.”
28. He appreciated that “that there [had been] some delay,” but said: “it seems to me that probably the earliest this could be arrived even without delay in this Court was by 2009/2010.” He said that he had considered suspending part of the sentence but that he had disregarded it.

29. He imposed four year sentences of imprisonment in respect of all counts to which the appellant had pleaded guilty, all to run concurrently. He took the remaining counts into consideration.

30. The judge made no order regarding the bail monies, amounting to €50,000. The appellant had stated that this sum of money was available to the Revenue Commissioners.

Submissions of the Appellant

31. The appellant sets out eight ground of appeal against the severity of the sentence of four years’ imprisonment with admirable clarity. These grounds can usefully be grouped as follows:

      1. Failure, in the structure of the sentence, to balance appropriately the objectives of deterrence and punishment in sentencing with the objective of rehabilitation in accordance with the principle of proportionality;

      2. Failure to accord any weight to the very substantial payments already made to the Revenue, in disregard of decisions of this Court, e.g. in People(Director of Public Prosecutions) v Perry and People(Director of Public Prosecutions) v Redmond;

      3. Failure to take account of the element of lapse of time and the fact that the appellant was sentenced by reference to a different climate regarding sentencing, in particular by reference to the decision of this Court in People(Director of Public Prosecutions) v Murray.

      4. Failure to take adequate account of mitigating factors, including co-operation with the Revenue and the plea of guilty and absence of previous convictions;

Ground I: Structure of the sentence

32. The principles governing sentencing in our courts have been well established by a number of key decisions. Any sentence imposed must be proportionate in the sense that it is appropriate, having regard to the seriousness of the offence and to the personal circumstances of the offender. Punishment of the offender and deterrence of others might be described as the prime objective of sentencing, but that is in the sense that they form the justification for imposing a sentence in the first place. The severity of the sentence will be tempered in each case, insofar as they are present, by one or more of the wide range of mitigating factors which have been recognised. Thus, the appellant is correct to submit that the deterrent, punitive and rehabilitative elements must be balanced in the sentence which the court decides to impose.

33. The founding statement may be found in the judgment of Walsh J. in The People (Attorney General) v. O'Driscoll (1972) 1 Frewen 351 at p. 359:

      "The objects of passing sentence are not merely to deter the particular criminal from committing a crime again but to induce him in so far as possible to turn from a criminal to an honest life and indeed the public interest would be best served if the criminal could be induced to take the latter course. It is therefore the duty of the courts to pass what are the appropriate sentences in each case having regard to the particular circumstances of that case - not only in regard to the particular crime but in regard to the particular criminal.”

      Walsh J. remarked in the case then before this Court that the sentences which had been imposed might “have a very deterring effect on other people but are not such as to induce these young men to turn froma criminal to an honest life.”

34. That statement was expressly approved both by Egan J. and by Denham J. (as she then was) in their judgments in the Supreme Court in People (Director of Public Prosecutions) v. M [1994] 3 I.R. 306. In that case, Finlay C.J., O’Flaherty J. and Blayney J. agreed with the judgments of both Egan and Denham JJ. Egan J. emphasised that “an essential ingredient for consideration in the sentencing of a person upon conviction, in any case in which it is reasonably possible, is the chance of rehabilitating such person so as to re-enter into society after a period of imprisonment.”

35. The judgment of Denham J. is notable for its statement that: “Sentences should be proportionate. Firstly, they should be proportionate to the crime.” Secondly, however, she added that they “must also be proportionate to the personal circumstances of the appellant.”

36. Each judge must, when imposing a sentencing take account, not only of punishment and deterrence, having regard to the gravity of the offence, but also of the personal circumstances of the accused, including any mitigating factors, and, especially, of any reasonable prospect of rehabilitation. It is, of course, fundamentally a matter for the trial judge to consider these matters and assess their weight. As is clear from the judgments of Egan and Denham JJ., it is only in cases of an error of principle that this Court can intervene.

Ground II: Account taken of payments to the Revenue

37. This is the most difficult part of the case and the principal focus of the appellant’s case. Echoing the submision made in the trial court that he had “emptied the cupboard,” counsel for the appellant said that the payment of the tax, interest and penalties had left him at zero and that this had occurred at a stage in his life where he would probably not be able to recover. He referred to McLoughlin v Tuite [1989] IR 82, to People (Director of Public Prosecutions) v Redmond [2001] 3 I.R. 390 and to People (Director of Public Prosecutions) v Perry, all cited earlier in this judgment.

38. Counsel submitted that, in the light of the very significant payments made by the appellant combined with their extremely serious effects on his career, his resources and his family, the decision of the learned sentencing judge could not be seen as a proportionate exercise of the judge’s discretion.

39. The context for the passage from McLoughlin v Tuite, upon which the appellant relies, was a challenge to the constitutionality of s. 500 of the Income Tax Act 1967, which provided for a fixed monetary penalty for failure to comply with a notice served on a taxpayer, as imposing a criminal penalty. Finlay C.J., delivering the judgment of the Court, said at page 88:

      “Throughout the many statutory provisions concerning the payment of income tax and other like taxes is to be found a consistent series of different statutory provisions clearly designed not only to ensure that each taxpayer should pay his fair proportion of the taxes levied, having regard to the extent of his income or wealth, but also that he should do so with a promptitude which will permit the central fund to be so established at any time as to avoid unnecessary short-term borrowing.”
40. He went on to observe that the rates of interest charged on late payments of tax “constitute[d] a very marked deterrent towards withholding tax on the basis that the taxpayer might be able to make more profitable use of the money and which would appear to exceed the cost of short-term borrowing to the Exchequer, arising from the delay in the payment of tax.” He followed with the passage which is relied upon as follows:
      “The provision of a penalty for the failure to make a return upon being requested so to do falls into the same category of deterrent and incentive as does this larger penal rate of interest on delayed payment. The payment of tax by the individual citizen is an involuntary payment and does not arise from any contract which he makes or is implied to have made with the State or with the Exchequer, and it is consistent with the nature of those payments that the particular sanction chosen to try and enforce compliance with the statutory requirements necessary for the ascertainment and payment of the liability for tax should be money payments.”
41. The Court rejected the claim of unconstitutionality. At page 90, Finlay C.J. said that “the only feature which could be said to be common between the provisions of s. 500 and s. 508 and the ordinary constituents of a criminal offence is that the payment of a sum of money is provided for which is an involuntary payment and which is not related to any form of compensation or reparation necessary to the state but is rather a deterrent or sanction.”

42. In People(Director of Public Prosecutions) v Redmond, the Director had applied to the Court of Criminal Appeal pursuant to the provisions of s. 2 of the Criminal Justice Act, 1993 for a review, in the ground of undue leniency, of a sentence imposed by the Circuit Court for a number of revenue offence to which the appellant had pleaded guilty. The judgment of this Court was delivered by Hardiman J. As that learned judge emphasised, an error of principle in the sentence was required to be demonstrated by the applicant. As he said at page 395, this “precisely reflects the principle on which the Court of Criminal Appeal deals with a defendant's appeal against severity of sentence.” This well-established principle was also applied by the Supreme Court in People (Director of Public Prosecutions) v. M, cited above.

43. The appellant had pleaded guilty in the District Court to ten virtually identical charges the first nine under s.10 of the Finance Act 1983, as amended and the tenth under s.1078(2)(g)(i) of the Taxes Consolidation Act 1997. All related to the appellant’s failure to make returns of income over a ten-year period. As the judgment emphasised at page 393, he was not being being “penalised for failure to pay income tax,” but “solely for his failure to make returns.” The Circuit Court judge had imposed fines totalling £7,500 in respect of all the offences. The Court considered it significant that counsel for the “the prosecutor was concerned about the adequacy of the fines imposed and was not submitting that there should be a custodial sentence.” Thus, the case does not consider any question as to the appropriateness of prison sentences in tax cases. Counsel for the prosecution had “specifically confined his application for review to the proposition that the fines were too small in amount and did not submit that a sentence of imprisonment was appropriate…” (see page 403)

44. Counsel for the appellant on the present appeal relies on the Redmond case solely as authority for the proposition that, when sentencing for tax offences, a court should have regard to and take into account any interest and penalties paid by the offender. In fact, the prosection had “fairly and properly conceded that the court may have regard in considering sentence, to sums paid in the nature of civil penalties.” (see page 403). Thus, at several points, Hardiman J emphasised this point, adding:

      “We would only add that this is consistent with the attitude of the court in other cases. It would be unreal and unjust to exclude from consideration in a larceny case the fact that restitution had been made or damages paid, for example.”
45. Counsel for the appellant relied, for a reason peculiar to this case and to this judge on the decision of this Court in People(Director of Public Prosecutions) v Perry. Hardiman J. delivered an ex tempore judgment in behalf of this Court. The Court substituted a sentence, which had the effect of suspending the balance of the sentence which had been imposed in the Circuit Court, as it happens, by his Honour Judge Nolan. It is not possible to discern from the text of the judgment either what the original sentence was or what the suspended balance was. Counsel, however, helpfully informs us that the original sentence was one of twenty months and that only four months had been served. Nor is it possible to discern what the offences were, other than by reference to “long term evasion of revenue responsibilities.” The proposition for which that case stands is that the sentence had been “imposed purely for demonstration purposes.” As Hardiman J. correctly observed, “it is almost trite to say that the sentence in every case, no matter what the nature of the case, must take into account both the offence and the circumstances of the offender.” The Court found that the learned judge had infringed this principle. It found that he had “excluded from his consideration any grounds for a custodial sentence other than the purely punitive.” The Court concluded:
      “In all the circumstances we are of the view that the learned trial judge erred in principle by wholly excluding the personal factors from what he seemed to think necessary…………”
46. Counsel for the appellant relies on People (Director of Public Prosecutions) v Perry, however, because, it is claimed, of the broad similarities between the facts of the two cases and that any differences tended to favour the appellant. It is submitted that the learned sentencing judge ought to have imposed a similar sentence to that imposed by this Court. Counsel then complains that the judge implicitly criticised the decision of this Court by observing that he considered his original sentence, which he had imposed in that case had been too lenient and that this amounted to failure to be bound by the authority of this Court.

47. The Court does not consider that this decision is relevant to its consideration. These submissions are not well founded. As already observed, the constant case-law of this Court is that it proceeds by way of examination of principle. An appellant does not establish an error of principle by comparison of the facts of one earlier case (which are not, in any event, available to this Court) and claiming that a similar sentence should have been imposed. The learned judge’s remarks concerning his earlier sentence in the Perry case were unfortunate and unnecessary, but they did not amount to a refusal to follow the authority of this Court. In the present case, unlike in the Perry case, the learned judge did not entirely exclude from his consideration the personal factors relating to the appellant.

Ground III: Lapse of time: changed climate of opinion

48. The appellant relies on the decision of this Court delivered by Keane J (as he then was) in People (Director of Public Prosecutions) v J(T). That was a case where the appellant had committed a large number of serious sexual offences against his niece, when they were both very young. They only came to light after an interval of more than ten years. The Court considered that the lapse of time could be significant as affecting the likely sentence that would be imposed after that interval compared with what would have occurred if they had been prosecuted closer to the time of the offences. Keane J. (for the Court ) said:

      “The lapse of time is significant…… because of the very different climate of opinion which prevails today in respect of offences of this nature [sexual abuse of children in that case]. . . . The court is satisfied that the criminal justice system cannot be indifferent to the fact that an accused person would probably have received a significantly more lenient sentence, had he not been deprived in the particular circumstances of the case of what would otherwise have been his constitutional right to an expeditious trial. What weight must be given to that factor will obviously depend on the facts of the individual case.”
49. The appellant submits that the time interval is significant in his case because his offences were committed in an entirely different climate with regard to sentencing for tax offences. He complains of lack of reasonable expedition in the criminal justice process. However, it worth noting the view of the learned trial judge that “probably the earliest this could be arrived [sic, probably meaning the earliest date for the trial] even without delay in this Court was by 2009/2010. The appellant says that he was not a person who was defrauding the State in times of financial difficulty. On the contrary his offences were committed in times of plenty, but his payments of tax, penal interest and penalties were made in times of real financial difficulty.

50. It is, however, submitted, on behalf of the Director, that there has been no appreciable delay on the part of the prosecution in the present case. The Appellant’s premises were searched in November 2005 and thereafter a very extensive investigation took place and voluminous records were obtained in this jurisdiction and abroad. The Appellant was invited to interview and declined in September 2008. He then moved abroad. Although the prosecution accepts that his solicitors on record in the criminal aspects of the matter were not informed of the intention to charge him, contact was made with his civil tax advisers, although they were no longer retained by him and he had not left contact details with the Revenue Commissioners. A European Arrest Warrant was issued and the appellant’s surrender was ultimately secured. The matter was brought before the Circuit Court in late 2010 and a guilty plea entered in January 2012. The Director submits that there was no breach of the appellant’s constitutional right to an expeditious trial and does not accept that the he would have received a much less severe sentence had he been sentenced sooner, for example in 2008. The significance which the appellant attaches to this issue is that, by reason of what he says is delay, he came to be sentenced in a different atmosphere concerning sentencing from what would have prevailed if he had been prosecuted earlier. This, it is said, is particularly exemplified by the decision of this Court in People (Director of Public Prosecutions) v Murray, in which judgment was delivered on 27th February 2012.

51. The decision of this Court in People (Director of Public Prosecutions) v Murray concerned an appeal against severity of sentence in a case of social welfare fraud. The appellant had pleaded guilty to twenty five sample counts of fraud and had been sentenced to a total of twelve and a half years imprisonment composed of twenty four consecutive sentences of six months.

52. The appellant had conceived an elaborate and sophisticated social welfare fraud, involving the misappropriation of some €249,000 and said to be the largest fraud of its kind uncovered to date.

53. The case is of interest because of the important and novel departure involved in the decision to offer general guidance to courts responsible for sentencing in the future. The opening remarks of Finnegan J. in giving the judgment of the Court were to the following effect:

      “How should a sentencing court treat offenders who have defrauded the public revenue by either engaging in unlawful tax evasion on the one hand or (as in this case) by making false social welfare claims on the other? Given the intrinsic importance of such questions for the public weal - not least at a time of financial emergency - it seems appropriate that this Court should now give some general guidance for future cases of this kind given that prosecutions for tax evasion and welfare fraud are likely to be a more common feature of the criminal justice landscape in the years ahead than may have been the case heretofore.”
54. The judgment contains a wide-ranging review of sentencing policy, reflecting on the different considerations affecting sentencing for different crimes. The following passages are worth quoting:
      “But serious offences against the person - involving as they do the unlawful use of violence - are nearly always in a separate category of offending, involving as they do moral delinquency of a high order……………”

      “Offences against the person…… involve an affront to human dignity, a key constitutional objective protected by the Preamble to the Constitution, a violation of the integrity of the person (Article 40.3.2 of the Constitution) and, as often as not, a violation of the dwelling (Article 40.5 of the Constitution):

55. The Court proceeded to consider crimes not involving personal violence:
      “This is not at all to suggest that crimes involving the loss of public revenue are somehow victimless crimes. Quite the contrary: offences of this kind strike at the heart of the principles of equity, equality of treatment and social solidarity on which the entire edifice of the taxation and social security systems lean. This is especially so at a time of emergency so far as the public finances are concerned.
The collapse of US investment firm Lehman Brothers in September 2008 triggered the onset of a global financial crisis which, in turn, has ushered in a contraction in our economy which is unparalleled in living memory. Faced with enormous demands on the public purse from the associated banking collapse and a continuing structural public deficit, the State has struggled during this period with a series of fiscal emergencies. To their great credit, the Irish people have as a consequence stoically endured significant taxation increases, reductions in social security payments and retrenchment at all levels in the provision of social services, as the State endeavours to restore equilibrium in the public finances.

All of this calls for a high level of social solidarity. We have seen from elsewhere how widespread tax evasion by the wealthy and well-to-do can gravely threaten social solidarity and, as a consequence, the very stability of a state itself. That solidarity would also be gravely endangered if taxpayers were led to believe that social security fraud was rampant or that, when detected, it would not be dealt with severely. By the same token, social security fraud impacts heavily on those who are most in need, since, by definition, it saps public confidence in the system and, of necessity, erodes the total sums available for the needy and those genuinely reliant on such payments.

56. The Court then turned to consider how these matters should affect sentencing:

      “In the case of offences involving the public purse, deterrence plays an important value in the sentencing process. In the context of frauds upon the public revenue, deterrence is an important consideration, in that it is a necessary quid pro quo of social solidarity. It gives an assurance to the hard-pressed bona fide taxpayer that the State will both collect and distribute its revenue fairly and that those who defraud will be sternly dealt with. Some element of severity is necessary to ensure that taxpayers will pay the State what has been deemed by law to be properly due and to assure those who rely on social security payments that public support for the needy will not be undermined by an official culture which either turns a blind eye to those who commit illegal tax evasion on the one hand, or social security fraud on the other, or which is indifferent to these consequences.

      We therefore suggest for the future guidance of sentencing courts that significant and systematic frauds directed upon the public revenue - whether illegal tax evasion on the one hand or social security fraud on the other - should generally meet with an immediate and appreciable custodial sentence, although naturally the sentence to be imposed in any given case must have appropriate regard to the individual circumstances of each accused.”

57. The relevance of the decision in People (Director of Public Prosecutions) v Murray needs to be considered in the light of the submission relating to the claimed failure of the learned trial judge to take account of the element of lapse of time and the fact that the appellant was sentenced by reference to a different climate regarding sentencing.

Ground IV: Other mitigating factors

58. The appellant complains that the learned judge failed to take adequate account of mitigating factors, including co-operation with the Revenue and the plea of guilty and absence of previous convictions.


59. The court may not alter the sentence imposed by the Circuit Court unless it finds that the learned judge committed an error in principle. The first question is whether he had proper regard to each of the elements which he was bound to consider in making his decision. Quite obviously, he had regard to the objectives of punishment and deterrence, and the appellant claims that he did so excessively, if not exclusively. In the view of the court, it is quite clear that the judge did not commit the error described in People (Director of Public Prosecutions) v Perry as excluding “from his consideration any ground for a custodial sentence other than the purely punitive.” the learned judge did take express note of the fact that the appellant was remorseful, had no previous convictions, had completely rehabilitated himself, indeed, that he had “many, many good points.” He accepted that he had to be given great credit for his attempts to pay and to deal with the revenue and that it was very unlikely that he would commit offences in the future.

60. He also expressly accepted that the appellant had made large payments by way of penalties and interest though, he observed, he was "probably a little bit behind in paying the penalties and interest.” At that point in his sentencing remarks, therefore, he would appear to have had proper regard to the very substantial payments of penalties and interest made by the appellant as is obviously required. This was discussed in the judgment of this court in People(Director of Public Prosecutions) v Redmond. Just as in any case of crime involving property or financial crime, it is material to consider the extent to which the injured party has been compensated. There is clearly a distinction between a payment of the previously unpaid tax and payment of interest and penalties. The last two are civil penalties for failure in observance of the tax code. In respect of the first, the taxpayer is entitled to less credit for belatedly meeting his obligations. A sentencing judge will, however, have regard to the matter.

61. The learned judge rightly took an extremely serious view of tax evasion. He correctly referred to the principle of fairness “ to the people of this country who mostly pay their tax,” in which echoes the principle of solidarity found in the judgment of this court in People (Director of Public Prosecutions) v Murray.

62. The learned judge, however, in the view of the court, fell into error in saying twice that defaulting taxpayers “ buy themselves away or out of a custodial sentence.” It was an error to suggest that offenders, in that situation, come to the court and say: “well, I paid the penalties, I paid the interest and let's move on.” The passage in which these remarks occur repeatedly suggest or strongly imply that reliance by an offender before the criminal courts on the fact that he or she has made substantial payments by way of tax, interest and penalties should be wholly or largely discounted. It is, of course, absolutely correct to say that no person charged with a criminal offence is entitled to be absolved from having a sentence of imprisonment imposed upon him merely because he has compensated the victim. It is equally correct to say that the payment of compensation to a victim may well, depending on the facts of the case, be regarded as a mitigating factor when it comes to sentence. The difficulty with these particular passages in the sentencing remarks of the learned judge is that they appear to impute to the appellant an attempt to buy off his liability to face, where appropriate, a sentence of imprisonment.

63. That is not the correct position in law. A taxpayer is liable both civilly and criminally in respect of his failure to observe his legal obligations to make returns of and to pay his taxes. His payment of the civil penalties and interest does not dispense him from responsibility for criminal behaviour. He may be punished by fines or imprisonment as appropriate. When considering sentence, however, it would be an obvious injustice if a person were not entitled to invite a court to take into account the extent of financial reparations he has been compelled to make on the civil side.

64. Next, it is necessary to consider the argument based on lapse of time and reliance on the decision of this Court in People(Director of Public Prosecutions) v J(T). The lapse in the present case bears no resemblance to that in J(T). The learned judge was probably correct to say that the present case could have been heard, at the earliest, in 2009 or 2010. Counsel for the appellant made no particular effort to establish in the Circuit Court as a matter of fact that there had been any delay in the conduct of the revenue investigation and subsequent prosecution of the appellant. It is clear that, following the search under warrant in November 2005, matters were pursued by way of mutual assistance in order to obtain evidence from the UK company involved. All this seems to have proceeded through 2007 and into 2008, when the appellant was invited for interview but declined. The argument before the learned trial judge was to the effect that, if the hearing had taken place “at any time up until relatively recently, the court might have taken a different view” on the matter of sentence. Counsel open People (Director of Public Prosecutions) v Murray to the court.

65. While the decision in People (Director of Public Prosecutions) v Murray is of great importance and will be relevant to sentencing in such cases as the present from now on, it is only fair to say that there can be no comparison between the type, scale and deviousness of the extraordinarily elaborate and calculated fraud which that case disclosed. On that basis, that case is readily distinguishable from the present. The court would add that People (Director of Public Prosecutions) v Murray does not and could not represent any departure from or qualification of the generally applicable principles of sentencing, discussed earlier in this judgment. However, to the extent that it represents a different climate regarding sentencing for social welfare and tax fraud, it is difficult to see how it assists the appellant that it was not delivered until February of this year. The time lapse in People (Director of Public Prosecutions) v J(T) was very much longer. Furthermore, Keane J was of the view that a very different climate came to prevail over that period to such an extent that it would be unjust to sentence the appellant by reference to the views of a later time. No such dramatic change can be shown in the present case over the comparatively much shorter interval. The Court can find no error in principle in the sentence imposed by the learned judge, by reason of the lapse of time.

66. Insofar as the fourth ground is concerned, the court does not accept that the learned judge failed to take into account the wide range of mitigating elements in the case. He referred to them extensively, was emphatic about the appellant’s general good character, his cooperation with the revenue and was obviously conscious of his plea of guilty. It has to be noted, however, that, in the specific area of due payment of taxes, the appellant cannot claim to have an unblemished character in view of his admitted significant failures in respect of income tax and capital gains tax.

67. In summary, the court finds that the learned judge committed an error in one respect. He discounted very largely or entirely the large settlements made by the appellant with the Revenue and their destructive effects on his finances, his life, his capacity to earn and his family. The Court has summarised these extensively in the earlier part of this judgment.

68. The court considers that the sentences of four years were excessive. However, having regard to the seriousness and extent of the evasion of VAT and the dishonest way in which it was organised, it believes, however, that a sentence of imprisonment was warranted. Taking account of his very extensive settlements and cooperation with the Revenue, the destructive effects on his life, his plea of guilty, his rehabilitation and the other mitigating factors, it will reduce the sentences two years on each count to run concurrently.

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