Businessman, 71, jailed for tax evasion
A 71-year-old self-made businessman who failed to make tax returns worth more than €9m on behalf of himself and his company is to be jailed for three months, starting at 1pm on Thursday.
Leslie Reynolds (aged 71), of Offington Lawn, Sutton, Dublin, a director of Leslie Reynolds and Company Limited, pleaded guilty to the charge at Dublin Circuit Criminal Court.
Judge Desmond Hogan, who also fined the company a total of €15,000, agreed to an application by defence counsel, Mr Patrick MacEntee SC (with Mr Paul Green BL) to put a stay on the sentence order until Thursday.
Mr MacEntee said the main reasons for his application was to give Reynolds time to put his affairs in order before incarceration and also to apply for a certificate for leave to appeal the sentence.
Judge Hogan said that Reynolds' age and his current fully tax-compliant status, as well as the €9.9m he paid to the Revenue Commissioners since the investigation into his company began, were mitigating factors that he took into account in imposing the sentence.
Judge Hogan gave Mr MacEntee until 12.45pm on Thursday to make any applications to the court that he might have in relation to the sentence. He said the warrant on Reynolds will take effect from 1pm that day, should there be no further developments.
Judge Hogan described Reynolds and his company as "greatly intertwined" and said the company was "an extension of his own personality and methodology". While his son and wife were both co-directors, Reynolds was the "indispensable" figure.
"This is an offence of commission rather than of omission," Judge Hogan said. "It therefore warrants a custodial sentence."
Judge Hogan was told in evidence earlier that the investigation into the stainless steel magnate's tax offences began in September 1997 and led inspectors to banks in the United Kingdom, a business in Gibraltar, and to a man named Jesús in Spain.
The charges comprised 14 counts of tax evasion against him and 14 mirror counts against his company. Reynolds also pleaded guilty to one count of fraudulent trading and one count of concealment of records within the same period of time.
The €15,000 fine comprised of three individual €5,000 fines on charges relating to the company, with all others taken into account.
The court also heard that since being hit with the €9.9m bill by the Revenue Commissioners - which included €3.5m in liability, €4.7m in interest charges, €1.3m in civil penalties for the company in addition to personal liabilities and penalties - Reynolds has had to re-mortgage properties, leaving him in debt by more than €4m.
Before the investigations into his affairs began, Reynolds had owned his mortgage-free house in Sutton worth more than €1m, a mobile home in Wexford worth €30,000, two houses in Spain worth €440,000 and €167,000, a Porsche and a Jaguar.
Mr Derek Coleman, Chief Inspector of Taxes at the Revenue Commissioners, told the court that Reynolds, whose business is selling and supplying stainless steel, succeeded in evading taxes by manipulating the company's customer records, posting incorrect invoices, setting up false companies and sequestering money in undeclared bank accounts.
Mr Coleman told prosecuting counsel, Mr Justin Dillon SC, that investigations revealed the company was suppressing sales to certain customers by having two sets of records.
The company had two customer lists, one of which was fully computerised and above board while the other contained "non-account customers". These were customers dealt with infrequently by the company and "for whatever reason" were not given an account number.
When such customers dealt with the company, they were not put through company records and were given an invoice manually written up, or in some cases typewritten. When such customers paid for their orders, the cheque was stapled to the invoice and handed to Reynolds.
Mr Coleman said the company's main banker was Bank of Ireland, but when payments were made by these "non-account customers" the money was lodged into a current account at Ulster Bank on Dublin's O'Connell Street or into an account at AIB, Finglas, Dublin, held jointly by Reynolds and his wife.
More than €2m had been lodged into the Ulster Bank between 1979 and 1997 and a similar amount had been lodged into the AIB account between 1977 and 1979. None of these moneys appeared in tax returns made by the company, Mr Coleman told the court.
The other method by which Reynolds evaded tax was by posting incorrect invoices to company records. Reynolds first did so through a company called Essential Supplies Company, with a postal address in Essex, England.
When inquiries were made at the United Kingdom Inland Revenue, it confirmed that no such company was registered in the UK. The address was a private residence, occupied by Mr Reynolds' brother-in-law, who was employed as a fraud investigator for British Airways.
He told Mr Coleman that he had given permission to Reynolds to use the address for postal correspondence. More than €1m was diverted from Leslie Reynolds and Company Limited in this manner and deposited into a number of accounts at NatWest in England and the Isle of Man.
The investigations also uncovered a company called Suministros Esenciales - a rough Spanish translation of Essential Supplies - based in Spain. Mr Coleman told Judge Hogan that inquiries made with Spanish authorities involving this company "led us to Jesús".
"Jesús Gerlado Sanchez," Mr Coleman qualified. Mr Sanchez, a tax inspector, confirmed that Suministros Esenciales was a registered company in Spain. It was registered in 1994 in the name of Leslie Reynolds, his wife and his son.
The invoices from this company bore no relation to those seen at Leslie Reynolds and Company Ltd., Mr Coleman said.
Information obtained from Mr Sanchez led Mr Coleman to Gibraltar and a company called St Louis Ltd., which had paid 33 million Pesetas, the equivalent of about IR£165,000, into Reynolds' Spanish company.
A combined total of €1.1m had been deposited at a Spanish bank from income generated via the two companies, Mr Coleman told Judge Hogan.
Reynolds also omitted VAT from all the "non-account customers" held by the company and, in relation to the PAYE where money had been taken from companies into the accounts, no PAYE had been deducted for either Reynolds or his wife.
Mr Reynolds, described in court as "a very good employer" who was worried about his 32 staff in the Republic of Ireland and nine in Northern Ireland, also failed to deduct PAYE from bonuses given to staff during summer and every Christmas.
Mr Coleman said the company evaded paying corporation tax in a similar manner by not disclosing to the auditor moneys that had been lodged at the Ulster Bank and AIB accounts, thus ensuring that when corporation tax was paid, these amounts were not taken into account.
The charge against him of concealment of records related to destruction of most company records through shredding and also wiping out entire computer records dealing with the Essential Supplies Company in England and Spain.
Mr Coleman said the office manager at Leslie Reynolds and Company Ltd. Had been able to delete all records for the Spanish company but was unable to do so for the company based in England as there was money remaining in the accounts.
Those records were deleted by a specialist English company, which was instructed by Leslie Reynolds and Company Ltd. to delete all the said records. Mr Coleman said the English company showed him a fax from Reynolds' company bearing the instructions to delete all the records.
The court heard that since being investigated, Reynolds has taken substantial steps to ensure "good governance" at his company, changing the auditor, ensuring the accounts are well kept and paying to ensure professionalism at every stage within the company.
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