Legendary musical duo Foster and Allen's challenge against demands by Revenue for approximately €3m each for unpaid taxes have been dismissed by the High Court.
Revenue sought summary judgment for €3.389m against Mr Anthony "Tony" Allen of Kileenatoor, Mount Temple for unpaid income taxes and penalties between 1986 and 1997. Mr Allen opposed the application on the basis he had a bona fide defence to the demand and the matter should go to full hearing.
In a separate motion to the court Michael Mick Foster of Walshtown, Mullingar, asked the court to set aside a summary judgment for €2.947m for unpaid taxes from 1986 to 2002 obtained against him by Revenue in December 2008.
The Revenue Commissioners represented by Gary McCarthy SC had opposed the musicians applications.
Last Tuesday, Mr Justice John Hedigan dismissed Mr Foster's application after finding it was out of time and granted judgment against Mr Allen on the grounds he had failed to make out a defence that had any realistic chance of success.
Mr Justice Hedigan, who noted that the musicians had brought "great joy" to many over the years, said he was sorry but the court was satisfied to rule against them.
The judge in striking out Mr Foster's bid to set aside the 2008 judgment against him said it was "a hopeless application," and described some of the points raised in his defence as "extremely weak." The judge said he had left the judgment against him "sit unchallenged" for a period of two years, which was too long.
The judge also granted Revenue judgment of €3.389m against Mr Allen, after ruling that he did not raise any bona fide defence with any realistic prospect of success at a full hearing. The judge added that points raised in his claim were "a non starter".
In their affidavits both musicians claimed Revenue was not entitled to judgments against them on grounds including that the basis for income tax liability for each of the years was not set out, they were entitled to claim Artist's Exemption Relief for the years in question and that notices of assessment for several of the years in question were not issued against them.
They added that in 1998 had been agreed with their then advisers and Revenue that their liability up to 1997 was IR£175,000. It was further claimed that revenue applied a 10% surcharge for the late submission of returns which they were not entitled to do.
They both said they were victims of a fraud perpetrated on them by accountant and barrister Patrick Russell of Steelstown, Rathcoole, Co Dublin, who they engaged to resolve their tax affairs.
Both men said they each paid Mr Russell €50,000 to settle in full their tax liability. He supplied them with a letter from Revenue saying their tax affairs were in order. However, counsel said Revenue did not receive that money and the letters were forgeries.
The court heard that in conversations with a Revenue official Mr Foster said that people thought the duo were "multi millionaires" compare them favourably to U2. However the reality was that neither "makes a lot of money as everyone seems to think".
Mr McCarthy for Revenue said the court should grant judgment against Mr Allen as he had failed to make out any bona fide defence to the claim, which he said had "no prospect of success".
Counsel said Mr Foster had "inordinately delayed" in bringing his application to set aside the judgment against him. Counsel added that Mr Foster also had no defence to the claim against him.
Rejecting their defences counsel said tax assessments, which were both final and conclusive, had issued against both men for the years in question and were never appealed by either man.
Counsel said their application for Artist's Exemption Tax was made by in 1981, but was deemed incomplete and was never followed up on. Nothing happened in this regard until 1998 when the musician's advisers sought to renew their application.
The advisers were informed by Revenue that the original claim was deemed to be abandoned, could not be reactivated and a fresh application should be made. The Taxes Consolidation Act of 1997 precludes a retrospective application for such an exemption counsel added.
Counsel said that there was never an agreement in 1998 between the duo's advisers or Revenue. In any event counsel added the IR£175,000 was never paid. Counsel said Revenue was perfectly entitled to add a surcharge.
Counsel said that while Revenue had every sympathy with the musicians in relation to their dealings with Mr Russell, it was not relevant in relation to the proceedings before the court.
David Goldberg SC for Foster and Allen said that his clients had been trying to deal with matters, and were entitled to a full hearing rather than have a summary judgment made against them.
Counsel said that his clients had not got all the documentation they required to meet revenues demand which had effectively left "with one hand tied behind their backs.
The demands were of some "antiquity" and Revenue had "delayed for 30 years before pursuing them," counsel said, adding that his clients had been tax complaint in regards to other matters.
Duo plan to appeal Court ruling
"There isn't any point in worrying, if you were going out in the rain, frost or snow, there'd be no point in getting annoyed over it because it's not going to change anything. If I started to worry about it I'd probably end up in St Loman's but I'm lucky enough to have that sort of temperament not to let it get to me," these were the words Mick Foster used to describe how he was feeling following a court ruling which saddleswith a bill of €6 million in taxes and penalties owed to the Revenue Commissioners.
They had unpaid taxes of about €1 million each but the total amounted to more than €3 million each because of penalties and interest charges it emerged in the High Court on Tuesday last week.
"Tony and myself don't have this three million apiece so there's no point in worrying about it," Mick explained, adding that the musical duo had always paid income tax on all earnings from tours and concerts, but it was the royalties from their music that was a "bone of contention".
"We were informed that we could get an artist exemption on the royalties," Mick explained, adding that they hired a professional to sort out any returns they hadn't made.
The duo told the court that their accountant provided them with a letter on Revenue headed paper stating that all their tax affairs were in order, which turned out to be a forgery.
"The plan is to meet with our legal team this week and probably appeal it, we will act on their advice," he concluded.
Now 36 years playing together, Mick and Tony have sold over 20 million records across the globe, with A Bunch of Thyme their most famous recording.
There have been a number of highlights in theirmusical career, and among them was the discovery in the week of November 6 1983, that Foster and Allen were at the top of the official music video charts with By Request.
They also famously appeared on Top of the Pops and played at Croke Park and Villa Park in Birmingham.