IT consultant who failed to pay 180,000 euros in VAT has to go to prison after receiving too lenient suspended sentence

An IT consultant who failed to pay more than €180,000 in VAT over a seven-year period has been sentenced to 12 months in prison after the Court of Appeal ruled that his suspended three-year sentence was too lenient.

Clive Gargan (48) had repaid the amount due plus interest and was tax compliant at the time of his original conviction.

Gargan was accused of a total of 84 cases of infringement of VAT law: 42 cases of failure to submit VAT returns and 42 cases of failure to pay VAT within a statutory deadline between 2009 and 2016.

After Gargan pleaded guilty to eight counts, the sentence was suspended entirely, with the remaining counts taken into account.

Gargan, of The Belfry, Kilmainham, Dublin 8, was a self-employed IT consultant working for various companies. He was registered for VAT between 25 October 2004 and 1 November 2006, after which he de-registered.

The State had appealed against the reduction of the three-year suspended sentence imposed by Judge Patricia Ryan at Dublin Circuit Criminal Court on 15 December 2023, on the grounds that too much weight had been given to the mitigating circumstances in this case.

The Attorney General stressed that the defendant did not stop his criminal conduct until he was caught.

Fundamental error

Delivering judgment in the Court of Appeal on Tuesday, Justice Isobel Kennedy said the court was of the opinion that the suspended sentence imposed by the trial judge was a fundamental error.

She said that while the court did not accept the state’s argument that the defendant had essentially received “no punishment” because a suspended sentence was “a punishment,” the court found that reducing the actual sentence from five years to probation was a significant departure from the norm.

She found that the offences continued over a long period of time, from May or June 2009 to March or April 2016, and that the amount involved was “significant”.

Judge Kennedy overturned the original ruling, saying the three-judge panel had agreed to nominate a maximum sentence of five years’ imprisonment, which is universally applicable, but added that “proportionality is central to a fair sentence” and the right sentence “reflects the crime of the individual offender.”

After weighing up mitigating circumstances, including the “albeit belated” admission, the payment of the amount plus interest and the absence of previous convictions, the court concluded that, taking mitigating circumstances into account, an appropriate reduction of the prison sentence of 18 months was appropriate, leaving a prison sentence of three and a half years.

Judge Kennedy, sitting with Judges Patrick McCarthy and Tara Burns, said the court would suspend the final two and a half years of the sentence to encourage rehabilitation, leaving a one-year sentence.

Investigation

Gargan’s misdeeds came to light when a company that had used his services wanted to file a VAT return and was asked to provide certain information to the tax authorities so that the return could be processed.

This information also included two invoices from the defendant with a VAT identification number that had been invalid since November 2006.

Further investigations revealed that Gargan had received payments from this company from 2011 and from a second company, Ergo Services, in 2008, 2010 and 2011, and that no VAT refunds were received for any of these transactions.

The total VAT amount in this case was €180,623.51.

Gargan was charged with 42 counts of failing to lodge a VAT return contrary to section 1078(2)(g)(ii) of the Taxes Consolidation Act 1997, as amended by section 133(a) of the Finance Act 2002, and 42 counts of failing to pay VAT when due within the statutory time, contrary to section 1078(2)(i) of the same Act, as amended between 2009 and 2016.

The defendant paid the VAT due plus interest on 30 June 2016.

When the verdict was announced on December 1, 2023, around 16,000 euros were still outstanding.

The judge adjourned the case for two weeks to allow the defendant to pay the outstanding amount before issuing her judgment.

Gargan had no previous convictions and was tax compliant at the time of sentencing.