Bunhill: McCarthy pub trials

Guinness has been innocently drawn into a tax scandal in Ireland, but shareholders can relax: many of the country's 10,000 publicans are the culprits.

A six-month investigation has uncovered a vast range of tax dodges. The trade is coughing up Ir pounds 100m in extra taxes for the years 1988 to 1991 - more than 1 per cent of Ireland's total annual tax revenues ( pounds 8.4bn last year).

For the most part, Ireland's pubs are owner occupied, and under ancient licensing laws they are protected from competition. They are on to a good thing: the Irish spend 7.5 per cent of GNP on alcohol. It is the bigger licensees around Dublin who have borne the brunt of the Revenue attack and settlements of pounds 100,000 are not uncommon.

The three-man Revenue investigation was led by Tony McCarthy, a middle-aged civil servant. McCarthy, referred to as 'The Boot' by unloving publicans, recently listed some of the trade's scams.

Last year, Guinness gave vouchers for free air travel, ranging in value from pounds 50 to pounds 5,000, to 3,522 people in the licensed trade who had met sales targets. McCarthy said not one of these vouchers has been declared for income tax.

Others were paid bonuses for committing to sell certain products over a number of years. McCarthy found one sole trader had received pounds 66,000 in a single day from suppliers.

Publicans bought goods from cash and carry shops where false names were filled in on sales dockets. They dipped into tills to pay cash for goods and dipped again to take the tax-free profits afterwards.

Each time publicans introduced a new line of stock, they expected a hefty backhander in the form of 'samples'. The Revenue found that some landlords were making pounds 125,000 a year in samples.

Or there was straightforward smuggling from Northern Ireland, where drink is cheaper. One ring was bringing 500 barrels (worth pounds 60,000) a week over the supposedly well-guarded border.

An alert member of the McCarthy team noticed a 40-ounce bottle of vodka on the shelf of a small pub in County Donegal, close to the border with Northern Ireland. He checked delivery dockets and saw there was no record of such a bottle being delivered.

The publican made a clean breast of it. He had driven his daughter across the border to school most mornings and returned with a bottle of vodka. The result of this bottle-a-day habit: a pounds 34,000 settlement.