Carey v A Company

• Jurisdiction: Ireland
• Judge: Ms. Justice Murphy
• Judgment Date: 16 January 2019
• Neutral Citation: [2019] IEHC 90
• Docket Number: [2016 No. 263 MCA]
• Court: High Court
• Date: 16 January 2019

IN THE MATTER OF SECTION 902A TAXES CONSOLIDATION ACT, 1997 (AS AMENDED) AND IN THE MATTER OF REGULATION S. I. 549 OF 2012

BETWEEN

FLORANCE CAREY

APPLICANT

AND

A COMPANY

RESPONDENT

[2019] IEHC 90

Murphy

[2016 No. 263 MCA]

THE HIGH COURT

JUDGEMENT delivered by Ms. Justice Murphy on the 16th day of January, 2019

1 The applicant is an officer of the Revenue Commissioners who has been duly authorised to bring the within application. The respondent is a third party company which holds information that is of interest to, and is being sought by, the Austrian tax authorities in connection with an ongoing tax investigation. The information is sought pursuant to Directive 2011/16 EU on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC. The application is made pursuant to s. 902A of the Taxes Consolidation Act, 1997 (as amended) which section has been adapted by Statutory Instrument 549 of 2012 to give effect to the Directive.

2 Section 902A forms part of Chapter 4 of the Taxes Consolidation Act, 1997 which confers statutory powers on Revenue in the conduct of tax investigations. Both ss. 902 and 902A give Revenue power in certain specified circumstances to obtain relevant information that is in the possession of third parties. Prior to this s. 902A application, an authorised officer served a notice pursuant to s. 902 on the third party company seeking the names, addresses and, if available, the dates of birth of persons identified in a schedule furnished by the Austrian tax authorities. The third party company refused to comply with that notice, citing data protection and other concerns. This application is for an order directing the respondent company to furnish to the applicant the same names, addresses and, if available, the dates of birth of the persons identified as were sought in the s. 902 notice. The respondent seeks to resist the application on a number of legal grounds, one or more of which it claims, renders the initial order to produce the information served pursuant to s. 902 of the Taxes Consolidation Act and this application for a court order directing them to produce the said information, invalid and/or unlawful. For the reasons set forth in this judgment the court has concluded that it has no jurisdiction to determine the substantive issues sought to be raised by the company in an application pursuant to s. 902A. The substantive issues sought to be raised by the respondent can only be determined by way of judicial review or plenary proceedings.

Relevant law

3 At the root of this application is Directive 2011/16/EU on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC. The recitals relevant to this application are 1, 2, 6 to 9, 19 and 27. They state:-

(1) The Member States' need for mutual assistance in the field of taxation is growing rapidly in a globalised era. There is a tremendous development of the mobility of taxpayers, of the number of cross-border transactions and of the internationalisation of financial instruments, which makes it difficult for Member States to assess taxes due properly. This increasing difficulty affects the functioning of taxation systems and entails double taxation, which itself incites tax fraud and tax evasion, while the powers of controls remain at national level. It thus jeopardises the functioning of the internal market.

(2) Therefore, a single Member State cannot manage its internal taxation system, especially as regards direct taxation, without receiving information from other Member States. In order to overcome the negative effects of this phenomenon, it is indispensable to develop new administrative cooperation between the Member States' tax administrations. There is a need for instruments likely to create confidence between Member States, by setting up the same rules, obligations and rights for all Member States.

(6) … to this end, this new Directive is considered to be the proper instrument in terms of effective administrative cooperation.

(7) This Directive builds on the achievements of Directive 77/799/EEC but provides for clearer and more precise rules governing administrative cooperation between Member States where necessary, in order to establish, especially as regards the exchange of information, a wider scope of administrative cooperation between Member States….

(8) There should be more direct contact between Member States' local or national offices in charge of administrative cooperation, with communication between central liaison offices being the rule. The lack of direct contacts leads to inefficiency, under-use of the arrangements for administrative cooperation and delays in communication. Provision should therefore be made to bring about more direct contacts between services with a view to making cooperation more efficient and faster…

(9) Member States should exchange information concerning particular cases where requested by another Member State and should make the necessary enquiries to obtain such information. The standard of ‘foreseeable relevance’ is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that Member States are not at liberty to engage in ‘fishing expeditions’ or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer. While Article 20 of this Directive contains procedural requirements, those provisions need to be interpreted liberally in order not to frustrate the effective exchange of information.

(19) The situations in which a requested Member State may refuse to provide information should be clearly defined and limited, taking into account certain private interests which should be protected as well as the public interest.

(27) All exchange of information referred to in this Directive is subject to the provisions implementing Directive 95/46/EC (Data Protection) of the European Parliament and of the Council of 24 October, 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and to Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December, 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data. However, it is appropriate to consider limitations of certain rights and obligations laid down by Directive 95/46/EC in order to safeguard the interests referred to in Article 13(1)(e) of that Directive. Such limitations are necessary and proportionate in view of the potential loss of revenue for Member States and the crucial importance of information covered by this Directive for the effectiveness of the fight against fraud.

4 The Articles of the Directive underpinning this application are Articles 1, 5, 6, 7, 17, 18 20 and 25.

5 Article 1(1) of Directive 2011/16 provides as follows:-

“This Directive lays down the rules and procedures under which the Member States shall cooperate with each other with a view to exchanging information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Member States concerning the taxes referred to in Article 2.”

Article 5 provides for the exchange of information on request and states:-

“At the request of the requesting authority, the requested authority shall communicate to the requesting authority any information referred to in Article 1(1) that it has in its possession or that it obtains as a result of administrative enquiries.”

Article 6 of the Directive deals with administrative enquiries and provides at 6(1):-

“The requested authority shall arrange for the carrying out of any administrative enquiries necessary to obtain the information referred to in Article 5.”

And at 6(3) it provides:-

“In order to obtain the requested information or to conduct the administrative enquiry requested, the requested authority shall follow the same procedures as it would when acting on its own initiative or at the request of another authority in its own Member State.”

Article 7 generally provides for time limits and specifically provides at 7(4) that:-

“Within one month of receipt of the request, the requested authority shall notify the requesting authority of any deficiencies in the request and of the need for any additional background information…”

Article 7(6) provides:-

“Where the requested authority is not in possession of the requested information and is unable to respond to the request for information or refuses to do so on the grounds provided for in Article 17, it shall inform the requesting authority of the reasons thereof immediately and in any event within one month of receipt of the request.”

Chapter 4 of the Directive which contains Articles 16, 17, 18, 19, 20, 21 and 22, deals with conditions governing administrative cooperation. Article 17 is headed “Limits” and provides at 17(1):-

“A requested authority in one Member State shall provide a requesting authority in another Member State with the information referred to in Article 5 provided that the requesting authority has exhausted the usual sources of information which it could have used in the circumstances for obtaining the information requested, without running the risk of jeopardising the achievement of its objectives.”

The third party company seeks in this application, to challenge the order requiring it to produce information, on the grounds that the requesting authority has not exhausted the usual sources of information which it could have used for obtaining the information requested.

Article 17(2) provides:-

“This Directive shall impose no obligation upon a requested Member State to carry out enquiries or to communicate information, if it would be contrary to its legislation to conduct such inquiries or to collect the...