Harris v Quigley & Irwin

• Jurisdiction: Ireland
• Judge: Mr. Justice Gilligan
• Judgment Date: 18 March 2005
• Neutral Citation: [2005] IEHC 81
• Court: High Court
• Date: 18 March 2005

[2005] IEHC 81

THE HIGH COURT

[No. 1586 S/2004]

HARRIS v QUIGLEY & IRWIN

BETWEEN

ROBERT HARRIS

PLAINTIFF

AND

J.J. QUIGLEY AND LIAM J. IRWIN

DEFENDANTS

TAXES CONSOLIDATION ACT 1997 S1013

TAXES CONSOLIDATION ACT 1997 S941(9)

TAXES CONSOLIDATION ACT 1997 S933(4)

TAXES CONSOLIDATION ACT 1997 S933(6)(a)

TAXES CONSOLIDATION ACT 1997 S934(6)

TAXES CONSOLIDATION ACT 1997 S934(7)

TAXES CONSOLIDATION ACT 1997 S941(1)

TAXES CONSOLIDATION ACT 1997 S941(6)

TAXES CONSOLIDATION ACT 1997 S941(9)

TAXES CONSOLIDATION ACT 1997 S966(5)

FINANCE ACT 1976 S30(3)

TAXES CONSOLIDATION ACT 1997 S942(6)(b)

TAXES CONSOLIDATION ACT 1997 S934

TAXES CONSOLIDATION ACT 1997 S942(6)

TAXES CONSOLIDATION ACT 1997 S941

TAXES CONSOLIDATION ACT 1997 S942

O'ROURKE v REVENUE COMMISSIONERS 1996 2 IR 1

TAXES CONSOLIDATION ACT 1997 S941(9)(a)

REVENUE COMMISSIONERS v DOORLEY 1933 IR 750

PARTINGTON v AG 1869 LR 4 HL 100

WOOLWICH BUILDING SOCIETY v IRC (NO 2) 1993 AC 70

REVENUE

Case stated

Overpayment - Refund - Whether taxpayer entitled to refund consequent on Appeal Commissioners' determination when case stated pending - O'Rourke v Revenue Commissioners [1996] 2 IR 1 and Woolwich Building Society v IRC [1993] AC 70 followed - Taxes Consolidation Act 1997 (No 39 ), s 941(9) - Refund ordered

1 JUDGMENT of Mr. Justice Gilligan as delivered on the 18th day of March, 2005 .

2 The plaintiff's claim in these proceedings is for the sum of €9,136,776.59 allegedly due to him by the defendants (The Revenue Commissioners) in the following circumstances. The plaintiff invested in a limited partnership established under the laws of the Cook Islands (the Christina Limited Partnership) in a capacity other than as a "limited partner" within the meaning of s. 1013 of the Taxes Consolidation Act, 1997. Following upon the plaintiff's claim for capital allowances the first named defendant disallowed the plaintiff's claim which had previously been allowed as a result of which there was an appeal by the plaintiff to the Appeal Commissioners in respect of which a determination was made on 29th October, 2004, in the plaintiff's favour. The effect of the Appeal Commissioners' determination is that the "ring fencing" provision of s. 1013 of the Taxes Consolidation Act, 1997, does not apply and the plaintiff is entitled to set off capital allowances and interest payments arising in respect of the partnership against his entire income. The Revenue Commissioners have requested the Appeal Commissioners to state a case for the opinion of the High Court on a point of law and pending determination of the case stated it is the Revenue Commissioners' contention that the plaintiff in his capacity as "the taxpayer" is not entitled to a refund of the tax as paid by him. The plaintiff on the contrary contends that he has been successful in his appeal from the decision of the Revenue Commissioners to the Appeal Commissioners and that he is accordingly entitled to a refund of the money so claimed, as a matter of statutory entitlement or alternatively as a matter of general principle.

3 There is no dispute between the parties as to the amount claimed.

4 The legal issue for determination in these proceedings is whether a taxpayer is entitled to a refund of tax consequent on the determination of the Appeal Commissioners notwithstanding that the Revenue Commissioners' appeal by way of a case stated on a point of law to the High Court and such appeal is pending. In particular these proceedings concern the correct interpretation of s. 941(9) of the Taxes Consolidation Act, 1997.

5 The relevant statutory provisions of the Taxes Consolidation Act 1997 are as follows:

6 933(4) "All appeals against assessments to income tax or corporation tax shall be heard and determined by the Appeal Commissioners, and their determination on any such appeal shall be final and conclusive, unless the person assessed requires that that person's appeal shall be reheard under section 942 or unless under the Tax Acts a case is required to be stated for the opinion of the High Court."

7 933(6)(a) "In default of notice of appeal by a person to whom notice of assessment has been given, the assessment made on that person shall be final and conclusive."

8 934(6) "Where an appeal is determined by the Appeal Commissioners, the Inspector or other officer shall give effect to the Appeal Commissioners' determination and thereupon if the determination is that the assessment is to stand or is to be amended, the assessment or the amended assessment, as the case may be, shall have the same force and effect as if it were an assessment in respect of which no notice of appeal had been given."

9 934(7) "Every determination of an appeal by the Appeal Commissioners shall be recorded by them in the prescribed form at the time the determination is made and the Appeal Commissioners shall within 10 days after the determination transmit that form to the inspector or other officer."

10 941(1) "Immediately after the determination of an appeal by the Appeal Commissioners the appellant or the inspector or such other officer as the Revenue Commissioners shall authorise in that behalf (in this section referred to as "other officer"), if dissatisfied with the determination as being erroneous in point of law, may declare his or her dissatisfaction to the Appeal Commissioners who heard the appeal."

11 941(6) "The High Court shall hear and determine any question or questions of arising on the case, and shall reverse, affirm or amend the determination in respect of which the case has been stated, or shall remit the matter to the Appeal Commissioners with the opinion of the Court on the matter, or may make such other order in relation to the matter, and may make such order as to costs as to the Court may seem fit."

12 941(9) "Notwithstanding that a case has been required to be stated or is pending, income tax or, as the case may be corporation tax shall be paid in accordance with the determination of the Appeal Commissioners; but if the amount of the assessment is altered by the order or judgment of the Supreme Court or the High Court, then -

13 (a) if too much tax has been paid the amount overpaid shall be refunded with interest in accordance with the provisos of s. 865(a), or

14 (b) if too little tax has been paid, the amount unpaid shall be deemed to be arrears of tax (except insofar as any penalty is incurred on account of arrears) and shall be paid and recovered accordingly."

15 966(5) "In proceedings pursuant to this section a certificate signed by an officer of the Revenue Commissioners certifying the following facts:

16 (a) that before the institution of the proceedings a stated sum for income tax became due and payable by the defendant -

17 (i) under an assessment which had become final and conclusive, or

18 (ii) under s. 942(6),

19 and

20 i (b) (i) that before the institution of the proceedings payment of that stated sum was duly demanded from the defendant, and

21 (ii) that the stated sum or a stated part of that sum remains due and payable by the defendant, shall be evidence until the contrary is proved of those facts."

22 There is a revenue precedent set out at p. 1975 of the Tax Acts 2004 (Lexis Nexis Butterworths) in the following terms:

"Revenue precedents

Issue: whether tax is to be repaid pending where a Case Stated has been requested. Whether assessment should be amended in accordance with the Appeal Commissioners determination where a case stated has been requested.

Decision: the reference in s. 941(9) to “tax shall be paid in accordance with the determination of the Appeal Commissioners” does not entitle the taxpayer demanding a case stated to repayment. Repayment arises only in accordance with sub-s. (9) itself. Section 30(3) FA 1976 (now repealed) and s. 942(6)(b) do not apply where a case stated has been demanded. There is no obligation under s. 934 TCA 1997 on the Inspector to amend the assessment where there is an appeal from the Appeal Commissioners' decision, since to amend the assessment in accordance with this section would give it the same force and effect as if it were “an assessment in respect of which no appeal had been given”. If it were such an assessment sections 942(6) and 941(9) would be redundant."

23 It is clear accordingly that where the Revenue Commissioners are successful before the Appeal Commissioners income tax or, as the case may be corporation tax shall be paid in accordance with the determination of the Appeal Commissioners notwithstanding any appeal by the taxpayer to the Circuit Court or by way of a case stated to the High Court. It is also clear in these circumstances that the relevant legislation does not entitle a taxpayer demanding a case stated to repayment. However the situation that arises in this case is that the taxpayer has been successful before the Appeal Commissioners and the only appeal that is open to the Revenue Commissioners is by way of a case stated on a point of law to the High Court.

24 The plaintiff's solicitors wrote to the Revenue Commissioners' solicitors by way of a letter of 23rd November, 2004, in the following terms.

"We refer to our discussions on last Friday and your confirmation that the Revenue Commissioners do not intend to repay the taxes owing to our client notwithstanding the successful conclusion of the appeal hearing in favour of our clients on 29th October, 2004.

We would be grateful if you could advise by return the statutory basis by which your clients are now claiming that they are entitled to deny our client a refund of significant amounts of money that are owing to him."

25 The Revenue Commissioners' solicitors replied by letter of 26th November, 2004, in the following terms:

"It is my client's case that there...