J.S.S. v Tax Appeal Commission

• Jurisdiction: Ireland
• Judge: Ms. Justice Power
• Judgment Date: 13 March 2020
• Neutral Citation: [2020] IECA 73
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2019/222
• Date: 13 March 2020

BETWEEN

J.S.S., J.S.J., T.S., D.S.

AND

P.S.

APPELLANTS

- AND -

TAX APPEAL COMMISSION

RESPONDENT

- AND -

CRIMINAL ASSETS BUREAU

NOTICE PARTY

[2020] IECA 73

Donnelly J.

Ní Raifeartaigh J.

Power J.

Record Number: 2019/222

THE COURT OF APPEAL

Judicial review – Tax appeals – Admission – Appellants seeking an order of certiorari in respect of a series of decisions made by an Appeal Commissioner of the respondent following a preliminary hearing on whether certain tax appeals sought by the appellants should be admitted – Whether the Commissioner failed to provide reasons for his decision not to admit the appeals

Facts: The appellants appealed to the Court of Appeal against the judgment of the High Court delivered on 5 April 2019 wherein the trial judge refused to grant an order of certiorari in respect of a series of decisions made by an Appeal Commissioner of the respondent, the Tax Appeal Commission, following a preliminary hearing on whether certain tax appeals sought by the appellants should be admitted. The hearing before the Commissioner was held on 21 June 2017 and his decision issued on 26 April 2018. Essentially, the Commissioner admitted appeals in respect of years wherein the appellants had delivered tax returns and he refused to admit appeals in respect of years in which either no tax returns had been delivered and/or no self-assessed tax liabilities had been paid. It was in respect of the decision to refuse to admit certain appeals that judicial review proceedings were instituted. The central complaint in the judicial review proceedings concerned the alleged failure of the Commissioner to provide reasons for his decision not to admit the aforesaid appeals.

Held by Power J that this was a case in which it was impossible to know why the Commissioner rejected the appellants’ core legal argument that a ‘chargeable person’ does not include a non-resident person and to know why he had come to that view.

Power J held that the appeal would be allowed.

Appeal allowed.

JUDGMENT of Ms. Justice Power delivered on the 13th day of March 2020

1 This is an appeal against the judgment of the High Court delivered on 5 April 2019 wherein the trial judge refused to grant an order of certiorari in respect of a series of decisions made by an Appeal Commissioner of the Tax Appeal Commission (‘the Commissioner’) following a preliminary hearing on whether certain tax appeals sought by the appellants should be admitted. The hearing before the Commissioner was held on 21 June 2017 and his decision issued on 26 April 2018. Essentially, the Commissioner admitted appeals in respect of years wherein the appellants had delivered tax returns and he refused to admit appeals in respect of years in which either no tax returns had been delivered and/or no self-assessed tax liabilities had been paid. It was in respect of the decision to refuse to admit certain appeals that judicial review proceedings were instituted. The central complaint in the judicial review proceedings concerned the alleged failure of the Commissioner to provide reasons for his decision not to admit the aforesaid appeals.

Background

2 The appellants—a father and his four sons—are members of the Irish Travelling community and have addresses in Rathkeale, County Limerick. Living a nomadic lifestyle, they stay in their caravans and work as tarmacadam contractors in various locations abroad for several months each year. Their primary claim before the Commissioner was that as members of the travelling community they were non-resident or not ordinarily resident for tax purposes in Ireland. That being so, they claimed, that the relevant provisions of the Taxes Consolidation Act 1997 (‘the 1997 Act’), which required the delivery of tax returns and/or the payment of self-assessed tax liabilities as a precondition to the admission of an appeal, did not apply to them as non-residents.

3 On 31 March 2016, the notice party—the Criminal Assets Bureau (‘CAB’)—issued to the appellants or to a number thereof, various income tax assessments or amended income tax assessments in respect of years ranging from 2004 to 2014 inclusive. The appellants disputed these assessments and by letter dated 26 April 2016 asked to have appeals admitted to the Tax Appeal Commission in relation thereto. CAB claimed that the appellants' income tax compliance history had varied over the years in question. It had no objection to appeals being admitted in respect of years in which tax returns had been delivered and/or self-assessed tax liabilities had been paid. However, it did object to the admission of appeals in respect of years where either no tax returns had been delivered and/or where self-assessed tax liabilities had not been paid. Its objection in this regard was based on its contention that the appellants had failed to fulfil the statutory conditions required for the admission of an appeal.

4 The respondent arranged for a preliminary hearing pursuant to s. 949E(2) of the 1997 Act to decide whether the appeals, to which CAB objected, ought to be admitted.

The Tax Appeal Commission Hearing

5 At the hearing, counsel for the appellants made the following submissions. As members of the travelling community, they spend very little time—approximately two months per year—in Ireland. The rest of the year they travel throughout Europe. As non-residents they are not ‘chargeable persons’. Not being ‘chargeable persons’, they are not obliged to file returns in Ireland. As non-residents they are obliged to have an agent acting on their behalf in Ireland and they do—an accountant, Mr. Loughran, from Tralee. The reasons they were given for the non-admission of their appeals were outstanding taxes and the failure to file returns. They denied that there were any outstanding taxes. They are not obliged to file returns because, as stated, they are not chargeable persons. Where a person is resident in Ireland, income returns are made in that person's name. Where a person is not resident in Ireland, that person does not make returns. Returns are made by that person's agent. In the case of a non-resident, it is the agent who is responsible, that is, ‘assessable’ and ‘chargeable’ for tax purposes. The appellants do not spend 183 days in the country in any year or 280 days in any two years. Consequently, they are clearly non-resident. No issue had ever been taken with this and CAB had certainly not exercised its right to dispute the question of residence in the manner prescribed.

6 A number of provisions of the 1997 Act were then opened in support of the appellants' claim that as non-residents they are not ‘chargeable persons’ and thus are not themselves obliged to file income returns. The first provision to which the Commissioner was referred was s.18(1)(a) of the 1997 Act. It provides:

“Tax under this Schedule shall be charged in respect of-

(a) the annual profits or gains arising or accruing to-

(i) any person residing in the State from any kind of property whatever, whether situate in the State or elsewhere,

(ii) any person residing in the State from any trade, profession, or employment, whether carried on in the State or elsewhere,

(iii) any person, whether a citizen of Ireland or not, although not resident in the State, from any property whatever in the State, or from any trade, profession or employment exercised in the State, and

(iv) any person, whether a citizen of Ireland or not, although not resident in the State, from the sale of any goods, wares or merchandise manufactured or partly manufactured by such person in the State.” (Emphasis added.)

Counsel submitted that this section establishes that the scope of Schedule D (which covers taxable business income) is such that whereas a non-resident may certainly be chargeable within the State, such charge is only in respect of activities that are actually carried on in the State.

7 The Commissioner was then referred to s. 1034 of the 1997 Act, the relevant part of which provides:

“ A person not resident in the State, whether a citizen of Ireland or not, shall be assessable and chargeable to income tax in the name of any trustee, guardian, or committee of such person, or of any factor, agent, receiver, branch or manager, whether such factor, agent, receiver, branch or manager has the receipt of the profits or gains or not, in the like manner and to the like amount as such non-resident person would be assessed and charged if such person were resident in the State and in the actual receipt of such profits or gains; …” (Emphasis added.)

It was submitted that this section establishes, clearly, that where a person is non-resident such a person is not assessable in his or her own name but rather in the name of a trustee or guardian or agent. The Commissioner's attention was drawn to the fact that the section is drafted in mandatory terms. A person not resident in the State shall be assessable and chargeable in the name of a trustee, guardian or agent. Pursuant to this section, it was argued, the appellants, as non-resident persons, are not chargeable. They are obliged to have an agent in Ireland and they do, a Mr. Loughran, based in Tralee. Their counsel stressed that the key words in the section were ‘assessable’ and ‘chargeable’.

8 The appellants, through their counsel, then referred the Commissioner to s. 950 and to the definition of the term ‘chargeable person’ contained therein. The definition reads as follows:

“…‘ chargeable person’ means, as respects a chargeable period, a person who is chargeable to tax for that period, whether on that person's own account or on account of some other person but, as respects income tax, does not include a person …” (emphasis added).

It was submitted that the reference to a person chargeable to tax ‘on account of some other person’ was deliberately inserted into the definition to encompass agents who, pursuant to s. 1034 are responsible for...