Tax Appeals Commission determination 28TACD2019 regarding CGT (Retirement Relief)., 2019

• Administrative Decision Number: 28TACD2019
• Year: 2019
• Date: 31 July 2019
• Respondent: REVENUE COMMISSIONERS

Ref: 28TACD2019

NAME REDACTED

Appellant

V

REVENUE COMMISSIONERS

Respondents

DETERMINATION

Introduction

1.The Appellant is one of 15 Appellants and it has been agreed between the parties that

this Appellant would take the lead appeal.

2.In this regard, while the Appellant paid capital gains tax the on the disposal of shares

(Shares) in the Newmarket Cooperative Creameries Ltd (Newmarket), a refund of that

tax is now being claimed on the basis that the tax had been paid in error in light of the

Appellant’s claim for relief from capital gains tax pursuant to Taxes Consolidation Act

1997 (TCA), section 598. The Appellant asserts that the Shares constituted chargeable

business assets and were used by him in his farming activities and therefore Retirement

Relief (Relief) should be available pursuant to TCA, section 598(2).

3.Therefore, pursuant to TCA, section 865(7), the Appellant has appealed the

Respondent’s refusal to repay capital gains tax.

Background

4.Newmarket was founded in the 1940`s. At the time of the transaction, Newmarket

carried on extensive manufacturing and retail business activities.

5.The objects for which Newmarket was established include many purposes, including

purchasing land for commercial, residential and investment purposes, lending money,

generating electricity, dealing in wines, beers, the carrying on the business of cafe

operators, carrying on the business of retailers, wholesalers, supermarkets,

tobacconists, engaging in currency exchange, carrying out manufacturing and freight

forwarding services.

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6.During the latter part of 2010 the Kerry Group, through its wholly owned subsidiary

Kerry Creameries Ltd, (Kerry) acquired all of the Shares in Newmarket in a takeover

(Takeover) transaction for a consideration of €421.00 per share.

7.At the time of the Takeover, Newmarket had 677 shareholders of whom 147 were dairy

farmers supplying raw milk to Newmarket. Some of the appellants who were supplying

milk to Newmarket as “Active Milk Suppliers” only became members of Newmarket

shortly before the Takeover on 22nd October 2010.

8.As such, the additional share allocation in 2010 was only awarded to “Active Milk

Suppliers” irrespective of whether they were members of Newmarket prior to the

Takeover. Furthermore, the additional shares did not issue to existing members who

were not “Active Milk Suppliers” at time of the Takeover.

9.The Appellant received €Amount Redacted in respect of his disposal of the Shares as a

result of Takeover.

10.On the 11th November 2011 a Return was filed on behalf of the Appellant disclosing sale

proceeds of €Amount Redacted resulting in a capital gains tax liability of €Amount

Redacted. The capital gains tax was paid by the Appellant.

11.Subsequently, on the 28th April 2014, the Appellant’s agent wrote seeking repayment of

the capital gains tax previously paid on the basis that relief under TCA, section 598

applied to the disposal.

12.Following correspondence between the parties, the Respondent asserted that the

Appellant did not submit a valid claim for the purposes of TCA, section 865. The

Respondent also determined that shares were not qualifying assets for the purposes of

TCA, section 598 and refused the Appellant’s claim to repayment.

Legislation

Taxes Consolidation Act

13.A claim for a refund of tax overpaid, subject to a 4-year claim limitation period, is

governed by TCA, section 865. The basis upon which a claim can be made is contained in

subsection 1(b) and states:

“(i) where a person furnishes a statement or return which is required to be

delivered by the person in accordance with any provision of the Acts

for a chargeable period, such a statement or return shall be treated as

a valid claim in relation to a repayment of tax where –

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(I) all the information which the Revenue Commissioners may

reasonably require to enable them determine if and to what

extent a repayment of tax is due to the person for that

chargeable period is contained in the statement or return, and

(II) the repayment treated as claimed, if due—

(A) would arise out of the assessment to tax, made at the time the

statement or return was furnished, on foot of the statement or return,

or

(B) would have arisen out of the assessment to tax, that would have

been made at the time the statement or return was furnished, on foot

of the statement or return if an assessment to tax had been made at

that time,

(ii) where all information which the Revenue Commissioners may reasonably

require, to enable them determine if and to what extent a repayment of tax

is due to a person for a chargeable period, is not contained in such a

statement or return as is referred to in subparagraph (i), a claim to

repayment of tax by that person for that chargeable period shall be treated as

a valid claim when that information has been furnished by the person, and

(iii) to the extent that a claim to repayment of tax for a chargeable period

arises from a correlative adjustment, the claim shall not be regarded as a

valid claim until the quantum of the correlative adjustment is agreed in

writing by the competent authorities of the two Contracting States.”

14.The right of appeal in respect of the decision by the Respondent to deny a refund is

governed by subsection 7 and states:

“Where any person is aggrieved by a decision of the Revenue Commissioners on a

claim to repayment by that person, in so far as that decision is made by reference to

any provision of this section, the person may appeal the decision to the Appeal

Commissioners, in accordance with section 949I, within the period of 30 days after

the date of the notice of that decision”.

15.Therefore, if the Appellant has made a “valid claim”, a consideration of TCA, section 598

is required. That section provides for relief to an individual on the disposal of all or part

of the qualifying assets of his or her business, provided the individual is aged 55 years or

more at the date of disposal.