Harrahill -v- O'Donnell, [2017] IEHC 483 (2017)

Docket Number:2012 485 R
Party Name:Harrahill, O'Donnell

THE HIGH COURT[2012 No. 485 R.]




JUDGMENT of Mr. Justice Eagar delivered on the 25th day of July, 2017

  1. This is a judgment on an application by the plaintiff to enter final judgment in the sum of €161,433.19 together with further interest on the principle sum of €117,600.40 at the statutory rate of 0.0219% for each day or part of day in relation to Capital Gains Tax from the 22nd of May, 2012.

  2. The application was grounded on an affidavit of Sheila Condon who states that she is an officer of the Revenue Commissioners and sets out the amount of the claim. She says the plaintiff’s claim is for arrears of tax and interest on foot of a return duly made which return has become final and conclusion within the meaning of the Tax Acts. She also states that the defendant has no defence to these proceedings either in law or on the merits of the case.

  3. The affidavit of Ann O’Donnell sworn on the 27th of February, 2014 states that the background of the alleged tax liability is that she entered into a contract to sell shares in a company called K&F Sarolla Teoranta to Kilmac Formwork Ltd. The said sale was completed in or around September 2007. Under the terms of the sale a total consideration of €735,000.00 were to be paid for the shares of which she was to receive €612,500.00 which reflected her shareholding in the company and the balance of €122,500.00 where received by her children in respect of their shareholding in the agreement. She said that on the signing of the share sale agreement she was paid €235,000.00 and her children were paid the sum of €122,500.00 out of the €235,000.00 which was full consideration for their shareholding.

  4. She said that her understanding of the taxation situation is as follows:-

    (1) Her children have fully discharged their Capital Gains Tax (CGT) liability.

    (2) She says in relation to her own CGT liability, the CGT liability was initially calculated based on the maximum consideration due notwithstanding that the sum of €500,000.00 remained outstanding. That is €735,000.00 minus €235,000.00. She said she never received the sum of €500,000.00 as the purchaser claimed that significant additional costs were incurred in relation to the lands which the company owned and which could have been claimed under the warranties/indemnity including in the share agreement.

    (3) In any event Kilmac Formworks Ltd. went into Receivership with effect from the 12th of January, 2012 and it is now clear that the balance of consideration will never be received by her.

    She says that as a result of the above and the fact that the consideration is not going to be received her accountant has informed her that her assessment should be amended under s. 959AA(2)(c). In that regard, an amended computation of the actual consideration received by her resulted in a CGT liability of €21,454.00.

  5. She says she has now submitted a revised tax return for the year 2007 along with supporting computation to the Office of the Revenue Commissioners. She says that she has a good defence in law and on the merits.

  6. The supplemental affidavit of Mary Hughes sworn on the 30th of April, 2014 indicates that she is an officer of the Revenue Commissioners, she states that having read the Share Sale Purchase Agreement provided by the defendant it appeared to be a contract to sell shares in a company K&F Sarolla Teoranta to Kilmac Formwork Ltd. for consideration of €735,000.00. The agreement was dated and she understands that the sale was completed on or about the 14th of September, 2007 and she says the agreement also fails to purport on a consideration between the defendant and her children and simply states that the consideration is of €735,000.00.

  7. She says that the CG58 Form exhibited is not used for the calculation of tax nor is it a return for CGT purposes. A CG58 Form is a Capital Gains Tax clearance certificate issued by the Revenue Commissioners in circumstances where the consideration in a transaction exceeds €500,000.00. This certificate merely allows a purchaser to pay consideration without the deducting of tax. She says that in correspondence dated the 11th of October, 2007 which she exhibits. The defendant’s agent confirms that the defendant’s consideration of further transaction between K&F Sarolla Teoranta to Kilmac Formwork Ltd. was €612,500.00 given rise to a total CGT liability of €117,700.19. She said the notice of assessment to CGT issued to the defendant on the 28th of November, 2011 and is based on the amounts contained in this computation submitted to the Revenue Commissioners on behalf of the defendant. She says that in her affidavit the defendant avers that she never received the balance of €500,000.00 from the purchaser Kilmac Formwork Ltd. due to issues that arose which allegedly could have been claimed under the warranties/indemnities provision of the Share Purchase Agreement. Ms. Hughes says that having reviewed this agreement, these...

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