Friday, May 05, 2023

Paul Neilan

A former senior audit partner at financial services giant Deloitte has lost an appeal against a High Court ruling that he can be criminally prosecuted for alleged tax offences, despite arguing he had a legitimate expectation that he would not be prosecuted.

In May of last year, the High Court ruled that Brian Murphy, a qualified accountant and former audit partner with the finance firm Deloitte, who brought proceedings against the Revenue Commissioners and the Director of Public Prosecutions (DPP), could be prosecuted.

In February 2014, the DPP issued a summons against Mr Murphy in relation to an alleged offence concerning a VAT refund claim on behalf of a company of which Mr Murphy had been a director.

In October 2015, the DPP further applied to have a criminal summons issued against Mr Murphy in relation to alleged offences regarding tax returns between 2008 and 2012. Mr Murphy denies any criminal wrongdoing.

Mr Murphy, of Carrigaline, Co Cork, claimed that a criminal prosecution would breach the terms of an agreement between him and Revenue in August 2015 in the context of certain civil proceedings which he claims meant he would avoid prosecution if he adhered to a settlement payment plan.

Mr Murphy had further relied on certain oral representations he claimed were made to him on behalf of a legal executive working for solicitors acting for Revenue that he would not be prosecuted.

The appellant claimed his prosecution would amount to a breach of his ‘legitimate expectation’.

Legitimate expectation is a legal principle which may apply where a public body leads a person to believe a particular state of affairs to be undertaken, and that person acts to his detriment in reliance on their representation.


Dismissing the 2022 application, Mr Justice Garrett Simons said Mr Murphy had not established the grounds for his claim of the breach of his legitimate expectation.

Mr Justice Simons said the agreement between Revenue and Mr Murphy was reached in 2015 following a separate decision in 2014 made by the DPP to issue a criminal summons against him.

That summons related to an alleged offence concerning a VAT refund claim on behalf of a company of which Mr Murphy had been a director.

Mr Murphy then entered into talks with Revenue to also discharge other unrelated arrears of tax before coming to an agreement on payments in August 2015.

He undertook to make monthly payments of €4,000 from August 2015 to December 2018 to settle the outstanding taxes. In addition, Mr Murphy offered to make annual lump sum payments ranging between €20,000 and €75,000.

The judge found that the 2015 agreement did not amount to a representation that the DPP would not pursue criminal proceedings against the appellant.

Mr Justice Simons said that if there was an element in the agreement to prevent criminal prosecution, it was “inconceivable that this would not have been expressly recorded in its terms”.

Mr Murphy appealed, and his lawyers submitted that the judge did not adequately analyse a series of communications between Revenue and Mr Murphy before the signing of the settlement.

At the Court of Appeal, Mr Justice George Birmingham said Mr Murphy had been “anxious” to enter into a settlement agreement with Revenue that could allow him to keep working in order to make his payments but to also enter into a “highly desirable” agreement that would “preclude criminal proceedings already instituted or any further proceedings”.

“On the other hand, the position of the Revenue Commissioners was that they were not going to commit themselves to non-prosecution or to preclude other means of enforcement,” said Mr Justice Birmingham.

‘Without prejudice’

The judge said that Revenue had “articulated clearly” to Mr Murphy that their position would be without prejudice to any other enforcement action or prosecution and had stated that this position be “clearly stated” throughout the settlement document.

However, the draft agreement furnished to Mr Murphy had no mention of a “without prejudice” clause. “It was silent on the issue,” Mr Justice Birmingham said. Mr Murphy then signed the document and claimed the absence of any mention of prosecution meant he had achieved his objective based on previous discussions with Revenue.

“I am quite unable to conclude that the absence of a ‘without prejudice’ clause amounts to an unambiguous and unequivocal representation to the effect that there would be no prosecutions,” the judge said.

Mr Justice Birmingham added that if Mr Murphy’s position regarding any clause was correct then the “prosecution, which had already been launched, would be halted and that the investigation which was at an advanced stage, would also be halted”.

The judge said that if the appellant was correct then it would have meant that even if underpayment of tax during other years, or other irregularities came to light, then “enforcement would be prohibited”.

“I am bound to say that I regard this as an extraordinary proposition. I cannot believe there was any representation to that effect and most certainly I cannot believe there was any representation that was unambiguous and unequivocal,” the judge said, stressing that the document was “silent” on the matter.

“Nobody who was facing a prosecution and then found that threat lifted would allow the appearance of the threat to remain in place for a day longer than necessary,” he said, adding that Mr Murphy would have “moved immediately” to have them struck out.

Mr Justice Birmingham said the trial judge properly assessed the case and “he was fully entitled to reject the claim, whether formulated in terms of legitimate expectation, or contract, or some cross between the two”.

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