Tax Appeals Commission Determination | Capital Gains Tax: Retirement Relief Claim

retirement relief claim

The Tax Appeals Commission’s (TAC) objective is to fulfil the obligations placed on it by the Finance (Tax Appeals) Act 2015 and the Taxes Consolidation Act 1997 (“TCA 1997”). To fulfil these, the TAC facilitates taxpayers in exercising, where appropriate, their right of appeal to an independent body against decisions and assessments of the Revenue Commissioners and the Criminal Assets Bureau.

The Issue for Determination

Recently, the TAC issued a determination addressing an Appellant’s (taxpayer’s) assertion that a Notice of Assessment to Capital Gain Tax (CGT) for 2011, issued by the Respondent (Revenue Commissioners) on 4 December 2018, should not have disallowed his claim for retirement relief (S598 TCA 1997) and Company Amalgamations/exchange of shares relief (S586 TCA 1997) which he had claimed in his income tax return for 2013.  The Revenue Commissioners had also issued a (related) Notice of Amended assessment to Income Tax for 2011 on the 5 December 2018.

The Background

In 1990, after many years of construction industry experience, the taxpayer set-up a building contracting company (the company) serving mainly local authorities and councils. He and his wife were the directors of the company. In 1997, his son started working for the company. 10 years later, with the taxpayer’s health in decline, he started the process of getting his son (the taxpayer’s son) to take over more of the running of the company. The taxpayer’s son’s wife also worked for the company in an administrative capacity. By 2011, the taxpayer contended that he wished to retire. A company was formed (HoldCo) of which the taxpayer’s son and his wife were the directors. The taxpayer sold some of his shares in the building company to HoldCo for €700,000. The balance of his shares and his wife’s share were transferred to HoldCo, for which they were issued 50% of the shares in HoldCo.

The €700,000 was not paid to the taxpayer until 2013. The taxpayer did not resign at any time as a director of the company nor was the taxpayer’s son ever appointed. The taxpayer and his wife continued to take undiminished salaries from the company until 2013.

In 2018, the company was audited by the Revenue Commissioners (with a view to examining the transaction now subject of this appeal) and it was the taxpayer who attended the audit meeting along with the taxpayer’s son’s wife.

Opposing Arguments

The Revenue Commissioners contended that at the audit meeting, the taxpayer said that nothing had really changed in the running of the business in 2011 compared to 2018. He also confirmed that the company’s office was in his house, he still effected payments from the company, but was only an adviser/mentor to his son since 2011.  The Revenue Commissioners contended that they did not get a clear answer as to why the €700,000 payment was not made until 2013 but they believed that the company was not in a financial position to do so in 2011.  While acknowledging that someone does not have to actually retire nor retire as a director in order to avail of retirement relief, it felt that on the “basket of evidence” the transaction was not entered into for bona fide commercial reasons.

On examination at the hearing, the taxpayer (and his son) outlined that the delay in the payment for the shares was to support bonds required for their construction contracts. They did not have any reason why the taxpayer’s son was not appointed as a director nor why the contact details on national websites, etc. were not updated.  They also outlined that the taxpayer attended the Revenue audit meeting as he was the person familiar with the audit period being looked at.

Findings

The TAC in its determination considered all the information and oral evidence, and found as material facts that:

  • The payment of €700,000, if it had been made in 2011, would not have been in the company’s interests
  • The taxpayer retained effective control of the company post-2011 through his ownership and directorship
  • In particular, the taxpayer retained financial and strategic control of the company
  • The transaction was not made for a bona fide commercial reason and that it did form part of a scheme of arrangement with the main purpose to avoid tax (S586 (3)(b) and S598 (8) TCA 1997)
  • Whilst the Revenue Commissioners were entitled to have issued their alternative Income tax assessment (per S817 TCA 1997), it was not necessary to consider it as the CGT assessment should be upheld in this case.

Determination

The Commissioner determined that the Revenue Commissioners assessment to CGT for 2011 in the amount of €348,112 should stand.

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Budget 2023 Analysis

Budget 2023

Delivering an €11bn Budget package, Minister Donohue described Budget 2023 as a ‘’Cost of Living Budget’’.  With individuals, families and businesses struggling with both the effects of inflation and the effects of the current energy crisis, this Budget contained immediate one-off supports aimed to respond to the acute needs of all. With even stronger than expected tax receipts in 2022, the Minister had plenty of firepower to deliver a comprehensive set of financial supports and set the scene for significant future investments in public services such as housing, health, education and transport.

Income tax changes were mainly limited to a threshold increase to €40,000, above which the higher 40% rate of tax would apply. There were also small increases to the main income tax credits.

What was significant though was the Minister’s reference to the recent work of Tax Strategy Group and to it assisting Government as a roadmap for personal tax reform over the next number of years to include the possible introduction of a 3rd rate of Income tax and changes to the operation of USC and PRSI.

The Minister took the opportunity re-affirm Ireland’s commitment to the OECD-led reform of Corporate Tax and to acknowledge Corporate Ireland’s significant contribution to the Country’s national tax purse. As expected, the Minister announced a National Reserve Fund which is to be immediately funded with €2bn from “excess” Corporate Tax receipts, with a further €4bn committed for 2023.

The extension of the Knowledge Development Box (KDB) and improvements to the R&D Tax Credit regimes are also welcome as Ireland aims to stay competitive in the FDI space.

For the SME sector, a.k.a. ‘’the backbone of our domestic economy’’, the main offer of financial support came in the form of a Temporary Business Energy Support Scheme which will see businesses who have experienced a 50% increase in energy costs from 2021, reclaim 40% of the increase.

Welcome too were the extensions to the KEEP and SARP incentive schemes although many had been requesting far wider changes to the schemes to what has been decided.

Whilst it is likely that the one-off support measures will grab the media headlines, it is the discussion and outcome of a changing future tax base to fund public services that will have a more profound longer-term impact on our society.

View the Budget 2023 highlights here.

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Budget 2023 Highlights

Budget 2023

Minister Pascal Donoghue delivered his final Budget today, 27 September 2022. With inflation currently running at 8.5% and projected to be 7.5% in 2023, the so-called Cost of Living Budget was heavily focused on addressing rising energy costs. Below we outline the highlights of Budget 2023.

Enterprise/SMEs/Agri-sector
  • Temporary Business Energy Support Scheme to assist businesses with their energy costs over the winter months. Open to businesses carrying on Case I trade, are tax compliant and have experienced significant increase in gas and electricity costs. Read more about the scheme.
  • Extension of the KEEP scheme to end of 2025 with increasing the company limit to €6m.
  • Special Assignee Relief Programme (SARP) extended to 2025 with minimum income limit up to €100,000.
  • Section 481 Film Relief to be extended to 2028.
  • Changes in the Research and Development Tax Credit and Knowledge Development Box (KDB) regime, with a company having the option to call for payment of their eligible R&D tax credit or to request an offset against other liabilities. The existing caps on the amount’s payable is to be removed. The first €25,000 of a claim will be payable in year one. The KDB is being extended a further 4 years to 2027. To comply with changes in international tax, specifically the Small Business Technology Transfer (STTR), there will be legislation changes for an increase in the effective rate of the KDB to 10%.
  • Foreign Earning Deduction (FED) scheme to extended to end of 2025 and provides relief from income tax on up to €35,000 of income for employees required to travel out of the State to temporarily carry out duties of employment in certain qualifying countries.
  • New 10% levy on concrete products.
  • Accelerated Capital Allowances for the construction of modern slurry storage facilities whereby the cost will be written off over two rather than seven years.
  • The Stamp Duty Reliefs for Young Trained Framers and Farm Consolidation are being extended to end of 2025.
  • The Capital Gains Tax Relief for Farm Restructuring is also being extended to the end of 2025.
  • Two special Stock Relief measures for registered farm partnerships and for young trained farmers being extended until the end of 2024.
Housing
  • Vacant Home Tax charged at a rate equal to three times the property’s existing basic Local Property Tax (LPT) liability. It will apply to residential properties which are occupied by for less than 30 days in a 12-month period.
  • Help to Buy Scheme will be continued until end of 2024 in its current form.
  • A new Renter’s tax credit of €500 will be introduced and backdated to 2022.
  • The relief for landlords for pre-letting expenditure will continue with an increase in qualifying costs up to €10,000 and the period of vacancy reduced to 6 months.
 VAT
  • The 9% VAT rate for the hospitality and tourism sector will cease in February, returning to 13.5% at this point.
  • The 9% VAT rate of electricity and gas will be extended until 28 February 2023.
  • Defibrillators, Hormone replacement therapy (HRT), Nicotine replacement products and period products will become VAT free.
  • VAT on newspapers, including digital editions, will be reduced to 0% from 1st January 2023.
Personal Tax
  • Small change to the second rate-band of Universal Social Charge which will increase from €21,295 to €22,920.
  • Income Tax Standard Band will increase by €3,200 to €40,000, with the married single earner band increasing to €49,000.
  • Personal, PAYE and Earned Tax Credits will increase by €75.
  • Home Carer Tax Credit will increase by €100.
 Other Measures
  • Revenue will conduct a range of targeted projects to include PAYE compliance interventions involving a focus on share schemes and increased debt management.

Read our Head of Tax Services, Eddie Murphy’s analysis of Budget 2023.

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Investing in Our Future Leaders

At Crowleys DFK, investing in our employees is an investment in our future. Our policy is to nurture talent from within, by providing employees with the time and resources they need to pursue their professional development. As employees realise their ambitions, their growth becomes part of the firm’s growth.

To this end, Crowleys DFK has modernised its Competency Framework through the creation of a new Competency and Career Paths Development Framework. This will provide a diverse range of career progression opportunities for our employees, providing a clear guide for choosing a potential career path or for measuring progress down their current path. The aim is to offer multiple growth and career opportunities that align with employees’ strengths and interests, empowering them to move to higher level or specialist positions, or to discover entirely new roles for themselves.

To support this new framework, Crowleys DFK also has established a Learning & Development (L&D) Programme to ensure our employees always have the opportunity to learn. Over time, our learning culture gives employees the knowledge, skills and experience needed to become new leaders in the firm. This is a fundamental part of our overall Performance Development Programme and maintains an environment in which progress is a constant. Having found their pathway to the future in our Competency Framework, our L&D Programme will assist employees on their journey there.

Describing the career progression environment at Crowleys DFK, Managing Partner James O’Connor has said:

“I am very proud to see our new Competency Framework & L&D Programme come into effect. Our commitment to creating a learning and career progression culture is so important to us as a firm, that it is one of our core values. We know that the firm is successful only when our people are successful. With these developments, we can ensure that everyone is getting the opportunities they deserve.”

If you are interested in a career with us, please check out our careers for experienced professionals or our graduate programme.

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Budget 2023 – What to Expect

Budget 2023

Eddie Murphy, Partner & Head of Tax Services, outlines what to expect in Budget 2023.

Budget 2023 is being delivered on 27th September. This is a few weeks earlier than planned, demonstrating the urgency and seriousness of the cost-of-living crisis we are all facing.

A once-off financial package close to €3 billion is to be made available to help struggling households.

It is also expected that the income tax package in the budget will include increasing standard income tax rate bands to reduce the amount of income being taxed at the 40% rate.

This same budget must also encourage investment and future growth in Irish businesses. This can be achieved by strengthening and improving the Employment Investment Incentive Scheme and Entrepreneur Relief. For indigenous Irish businesses, these are key determinants and drivers of their initial and onward growth.

Budget 2023 is expected to contain short-term measures of financial assistance to individuals and businesses alike. However, the Government must continue to also look at the medium and longer term to ensure it continues to support both FDI and Irish SME businesses in their drive to create and grow sustainable employment in this country.

Stay tuned for our Budget analysis next week.

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New Obligations for Overseas Entities with UK Properties

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Do you have property in the UK, or are you about to acquire or have you recently sold property there? If so, you must comply with new anti-money laundering legislation for UK properties.

On 1 August 2022, the new Register of Overseas Entities, came into effect through the Economic Crime (Transparency and Enforcement) Act 2022.

Any overseas entity that wants to buy, sell, or transfer property or land in the UK, must register with the UK Companies House and declare the identity of their beneficial owners or managing officers before 31 January 2023.

Overseas entities that disposed of property or land since 28 February 2022 (when legislation for the register was first announced) are required to provide a statement to Companies House.

The register applies to property acquired in:

  • England and Wales since 1 January 1999;
  • Scotland since 8 December 2014; and
  • Northern Ireland since 1 August 2022.

Failure to comply with these new obligations is a criminal offence and will lead to fines of up to £2,500 per day or a prison sentence of up to 5 years.

For further information, please Emma Dunne, Assistant Manager of Corporate Compliance.

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Everything You Need To Know About The Protected Disclosures (Amendment) Act 2022

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Protected Disclosures (Amendment) Act 2022

In July 2022, the Protected Disclosures (Amendment) Act 2022 was signed into Irish law. This Act gives effect to an EU Directive regarding the protection of whistleblowers and serves to amend and extend the Protected Disclosures Act 2014. This Act has made several substantial changes to the laws relating to whistleblowing in Ireland, generally expanding both the protections available to whistleblowers and the responsibilities imposed on companies regarding whistleblowing.

New Definitions of Protected Disclosures

The Amendment Act significantly expands the range of activities or acts of wrongdoing which are relevant to the purposes of the act. Whereas the 2014 Act describes a set of practices which may be relevant, the Amendment Act provides a broad list of areas in which, should an individual consider wrongdoing to be occurring, a Protected Disclosure may be made.

The Amendment Act has also clarified and expanded the types of individuals who can claim its protections when making a Protected Disclosure. The 2014 Act provides a definition of the types of “workers” who can claim the Act’s protections; the Amendment Act expands this definition both by adding new types of workers and also by clarifying that the information subject to a Protected Disclosure need only to have come to light in a “work-related” context.

Protections when making a Protected Disclosure

Under the Amendment Act, the range of protections available to individuals making a Protected Disclosure has also expanded. In particular, the Amendment Act has made extensive changes to the laws relating to any penalties an individual who has made a Protected Disclosure may have suffered. The 2014 Act provided a range of activities which it considered to be unfair penalisations of individuals who have made a Protected Disclosure; the Amendment Act has increased this list of penalties to include acts such as the withholding of training, negative performance assessment, harm to the individual’s reputation, and others.

Significantly, the Amendment Act also places the burden of proof on employers to prove that, should an individual who has made a Protected Disclosure suffer any of these penalties, that the penalty has no connection to the Protected Disclosure.

Requirements of Organisations under the Amendment Act

Under the Amendment Act, any organisation with 50 or more employees is obliged to develop internal reporting channels and procedures to facilitate whistleblowing for their staff. These obligations extend to private section organisations. A provision in the Amendment Act states that, for employers of between 50 and 249 employees, all obligations under the Act will not come into effect until December 2023.

The Amendment Act provides specifications regarding how these reporting channels should operate. These specifications are quite extensive and include timeframes for responding to Protected Disclosures, the appointment of an appropriate individual to investigate the Disclosure, provision of clear information to staff regarding the operation of these channels, as well as effort to ensure the confidentiality of individuals who make Protected Disclosures.

Click here to download a copy of our Guide to Everything You Need To Know About The Protected Disclosures (Amendment) Act 2022.

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RCT & VAT Pitfalls in the Construction Industry | Case Study Analysis

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Our previous article on RCT and VAT pitfalls for non-resident contractors provided a general overview of the RCT regime in Ireland. We will now look at a case study analysis of RCT and VAT treatment and explore scenarios in which we have observed mistakes commonly being made among taxpayers.

1. Supply of Labour for Relevant Operations

We have observed cases whereby contractors in the construction industry, particularly non-resident contractors, engage recruitment firms to supply labour to carry out construction operations on a site in Ireland.

While it is commonly interpreted that RCT only applies to construction operations, in fact the definition of “relevant operations” extends to both the carrying out of and the supply of labour for the performance of, relevant operations in the construction industry.

Case Study – Example 1

Company A (based in Spain) is engaged by Company B (based in Ireland) to carry out demolition works on a number of properties in Ireland. Company A, in turn, engages Company C (a recruitment firm based in the UK) to provide the personnel required to complete the demolition works in Ireland.

RCT Obligations

Company B is a Principal Contractor in respect of these works and is required to operate RCT on the payments made to Company A. This brings Company A within the scope of RCT as it is regarded as a Subcontractor carrying out construction operations in Ireland.

Whilst Company A is a subcontractor in respect of its engagement with Company B, Company A is also a Principal Contractor in respect of its engagement with Company C. Company A will be required to operate RCT on the payments made to Company C because Company C has arranged the supply of labour for the performance of the demolition works on the sites in Ireland.

This brings Company C, the non-resident recruitment firm, within the scope of RCT, as it is regarded as a Subcontractor carrying out construction operations in Ireland.

In this example, Company B must register for RCT as a Principal Contractor, Company A must register for RCT as both a Principal Contractor and a Subcontractor, and Company C must register for RCT as Subcontractor.

VAT Obligations

The provision of the services by Company C to Company A and Company A to Company B falls within a reverse charge provision for the supply of labour and construction services, which is subject to RCT.

Company C, as a Subcontractor, does not have an output VAT liability in respect of the provision of services provided to Company A. As such, Company C will issue its invoices to Company A with no VAT charge.

Company A, as a Principal Contractor, must self-account for VAT on a reverse charge basis (typically at 13.5%) on receipt of the invoices from Company C. Company A should have an entitlement to a simultaneous VAT input credit as it has used the services to make taxable supplies to Company B.

Company A, as a Subcontractor, does not have an output VAT liability in respect of the provision of the services provided to Company B. As such, Company A will issue its invoices to Company B with no VAT charge.

Company B, as a Principal Contractor, must self-account for VAT on a reverse charge basis (typically at 13.5%) on receipt of the invoices from Company A. Company B should have an entitlement to a simultaneous VAT input credit as it has used the services to make taxable supplies to Company B.

In this example, only Company A and Company B are required to register for Irish VAT. Only Principal Contractors are required to account for VAT on the receipt of construction services that fall within the RCT regime.

Company C is not required to register for VAT in respect of its supplies to Company A.

2. Mixed Contracts

A major risk with the definition of a relevant contract arises for contracts that cover both RCT-type and non-RCT-type supplies.

Case Study – Example 2

Company A engages Company B to carry out repair and maintenance works on a number of properties in Ireland.

Is the contract liable to RCT?

The definition of “construction operations” includes contracts for repair work which is interpreted as the replacement of constituent parts i.e., the repair of a broken window by installing a new pane of glass, mending a faulty boiler etc.

However, the definition of “construction operations” specifically excludes maintenance work i.e., cleaning, unblocking of drains etc.

In this example, Company A and Company B have entered into a repair and maintenance contract. This is referred to as a mixed contract. Revenue’s view on mixed contracts is that if any part of a contract includes “relevant operations” then the contract as a whole is considered a relevant contract and all payments under that contract are liable to RCT.

As Company A and Company B have entered into a mixed contract, the contract as a whole, is considered a relevant contract, and all payments made by Company A to Company B are liable to RCT.

This treatment applies even where no repairs are actually carried out by Company B in completing a particular job under the contract.

In this example, Company A must register for RCT as a Principal Contractor and Company B must register for RCT as a Subcontractor.

A common pitfall we see in this area is for a company to raise separate invoices for the maintenance work and the repair work. They then only treat the invoice for the repairs as being subject to RCT. This is incorrect as it is the overall contract, not the elements being invoiced, that governs whether RCT should be applied or not.

However, if there are separate contracts, one covering maintenance and one covering repairs, then only the contract covering the repairs is subject to RCT.

3. VAT Reverse Charge

VAT is normally charged by the person supplying the goods or services. However, under the RCT regime, the person receiving the goods or services (i.e., the Principal Contractor) accounts for VAT as if they had supplied the service and pays it directly to Revenue. This is known as the VAT Reverse Charge.

We commonly see the VAT Reverse Charge being applied incorrectly in cases where a subcontractor supplies goods or services, other than construction services, as part of the overall contract.

Contractors must be aware that while the overall contract may fall within the RCT regime, that does not mean that the VAT Reverse Charge applies to all goods or services invoiced under that contract.

Case Study – Example 3

The facts are the same as in Example 2. See below for reference:

Company A engages Company B to carry out repair and maintenance works on a number of properties in Ireland.

In this case the repair and maintenance contract in place between the parties provides that a separate charge will apply where repairs are carried out.

Company B has now completed repair and maintenance works for Company A and is looking to raise a sales invoice to Company A for the following:

  1. Repair Works – €4,500 (exclusive of VAT)
  2. Maintenance Works – €10,000 (exclusive of VAT)
VAT Obligations

Generally, the VAT Reverse Charge only applies to payments that are in respect of construction operations which in this case, are the repair works.

Company B must therefore issue two VAT invoices as follows:

  1. An invoice for the repair works of €4,500 on which the VAT Reverse Charge applies. Company A will be required to self-account for VAT at 13.5% on the receipt of this invoice from Company B.
  2. An invoice for the maintenance works (i.e., not considered a construction service) of €10,000 on which VAT at the 13.5% rate is applied. Company A will be required to pay Company B the total invoice value including VAT amounting to €11,350.
RCT Obligations

As set out in Example 2, where a contract is for repair and maintenance, RCT applies to all payments under the contract.

As such, Company A is required to notify the total payment to Revenue. This should include the VAT exclusive payment for the repair works plus the VAT inclusive payment for the maintenance works. Assuming for the purposes of this example that only one payment is to be made by Company A to Company B for the works, Company A would file a Payment Notification with Revenue as follows:

  1. Repair Works (VAT Exclusive) – €4,500
  2. Maintenance Works (VAT Inclusive) – €11,350
  3. Total Payment Reported to Revenue – €15,850

It is important to note that if a repair and maintenance contract provides for a single consideration for all works completed under the contract, then the VAT Reverse Charge must be applied to the full consideration.

Should you require any assistance in this area, please contact us.

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Accelerated Capital Allowances on Energy Efficient Equipment

Are you considering investing in new plant or machinery for your business? It might be worthwhile considering the tax advantages associated with certain energy efficient equipment.

Traditionally the cost of qualifying plant and machinery used in a business is written off against taxable profits in the form of wear and tear capital allowances over an eight-year period. However, in the case of energy-efficient equipment the full capital expenditure cost can be claimed in the year in which the expenditure is incurred.

The scheme, which runs until 31 December 2023, is available to both companies and unincorporated businesses that incur expenditure on eligible energy-efficient equipment for use in their trade.

The energy-efficient equipment must be:

  • New;
  • Designed to achieve high levels of energy efficiency; and
  • Must fall within one of the 10 classes of technology specified in Schedule 4A of the TCA, 1997.

Products eligible under the scheme are included in a list of energy-efficient equipment published and maintained by the SEAI. A full list of qualifying equipment can be viewed on the SEAI.

A minimum amount of expenditure must be incurred on providing the equipment. This varies with the category to which the product belongs. For example, a minimum spend of €1,000 applies to heating an electricity provision, while lighting equipment and systems carry a €3,000 minimum spend.

Electric and Alternative Fuel Vehicles

To promote greater use of low-emissions cars the Finance Act 2008 introduced accelerated allowances for “electric and alternative fuel” cars. The allowance is based on the lower of the actual cost of the vehicle or the specified amount of €24,000. As an alternative to claiming the qualifying cost of a car over the eight-year period, a business can elect to claim accelerated allowances in the year of acquisition.

For more information, please contact Niall Grant, Partner of Tax Services.

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Tax Appeals Commission Determination | Income Tax: Treatment of an IQA Allowance

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The Tax Appeals Commission’s (TAC) objective is to fulfil the obligations placed on it by the Finance (Tax Appeals) Act 2015 and the Taxes Consolidation Act 1997 (“TCA 1997”). To fulfil these, the TAC facilitates taxpayers in exercising, where appropriate, their right of appeal to an independent body against decisions and assessments of the Revenue Commissioners and the Criminal Assets Bureau.

The Issue for Determination

Recently, the TAC issued a determination regarding an Appellant’s complaint about the treatment of an IQA allowance he received in respect of his contributory pension for the years 2019 and 2020. The Appellant was dissatisfied with how he was assessed in relation to his contributory pension, in respect of which he received an increase for his spouse as a Qualifying Adult (Increase for a Qualifying Adult, or “IQA”).

The Background

The Appellant’s complaint related to how the Revenue Commissioners had interpreted an IQA allowance he received in respect of his contributory pension. According to the appellant, “this allowance [was] paid directly to his spouse”, who had “full and sole discretion over how it [was] expended”. In the appellant’s opinion, “whoever actually receives the money should pay the Tax on it. To expect someone else, who received none of that money, to pay the tax on it is unbelievable and very unfair”.

On 30 November 2021 and 6 December 2021, the Appellant received P21 Balancing Statements for the years 2019 and 2020. These indicated underpayments of income tax in the amounts of €3,660.36 and €3,810.69 respectively. On 16 December 2021, the Appellant duly appealed the P21 Assessments to the Commission, arguing that:

“Revenue’s position is that I am deemed to be the beneficiary of the Pension, plus the Increase for a Qualified Adult. They are clearly wrong in that stance. I am the beneficiary of the Pension only and my Wife is the beneficiary of the Qualified Adult Increase. Surely, the beneficiary has to be the person who actually receives the money and not somebody else? Regardless of what way the Government tricks around with the wording of the Acts, it cannot change that fact, which should override everything else.”

By contrast, the Revenue Commissioners’ position was that the IQA allowance was deemed to be the Appellant’s income for tax purposes, pursuant to section 126(2B) of the TCA 1997.

Opposing Arguments

The Revenue Commissioners submitted that “…it is incumbent upon [the Appellant] to demonstrate that Revenue has erred in the way he was taxed with regard to the QAD portion of his pension. Respectfully, the Respondent would argue that the assertion that Revenue is ‘clearly wrong’ does not meet that burden in a matter where the wording of the legislation is quite clear.”

For the Revenue Commissioners, that the appellant claimed “the government has tricked around with the wording of the Acts” implied dissatisfaction with the legislation itself, rather than with the Revenue Commissioners’ interpretation of the legislation.

Determination

The TAC in its determination considered all the facts and information presented, paying particular attention to the following:

  • Past case law examples – Lee v Revenue Commissioners [IECA] 2021 18 & Stanley v The Revenue Commissioners [2017] IECA 279.

The Commissioner determined that the Appellant had failed in his appeal and had not succeeded in demonstrating that the tax was not payable. It was noted that there is no discretion as regards the application of section 126(2B) of the TCA 1997 and the Revenue Commissioners were correct in their approach to the IQA income for the years under appeal.

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