Tax Appeals Commission determination 76TACD2021 regarding Corporation Tax, 2021

Administrative Decision Number76TACD2021
Date12 March 2021
Subject MatterCorporation Tax
AppellantREVENUE COMMISSIONERS
RespondentAppellant
76TACD2021
Appellant
V
REVENUE COMMISSIONERS
Respondent
DETERMINATION
Introduction
1. The issue in this appeal is to determine whether the business of the Appellant consists of
or includes the carrying on of a profession or the provision of professional services
within the charge to tax pursuant to Taxes Consolidation Act 1997 (TCA) section 441.
2. In forming the conclusion that the Appellant was within the charge to tax in accordance
with TCA, section 441, the Respondent raised Amended Notices of Assessment on 31st
March 2016 as follows:
Year Ended Amount Assessed
31 October 2012 €10,190
31 October 2014. €48,048
Total €58,238
3. Appeals against the assessments were lodged on 6 April 2016
Legislation
4. The surcharge provisions are now contained in TCA, section 441 and imposes a tax of 15% on an
amount equivalent to 50% on the undistributed professiona l income derived by a “service
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company” and a separate surcharge of 20% in respect of such a company’s undis tributed
investment and estate income. A “service company” is defined in subsection (1) as:
(a) a close company whose business consists of or includes the carrying on of a
profession or the provision of professional services,
(b) a close company having or exercising an office or employment, or
(c) a close company whose business consists of or includes the provision of services or
facilities of whatever nature to or for
i. a company within either of the categories referred to in paragraphs (a) and
(b),
ii. an individual who carries on a profession,
iii. a partnership which carries on a profession,
iv. a person who has or exercises an office or employment, or
v. a person or partnership connected with any person or partnership referred to
in subparagraphs (i) to (iv);
but the provision by a close company of services or facilities to or for a person or
partnership not connected with the company shall be disregarded for the purposes of
this paragraph
5. Subsection 2 provides that a company is not to be regarded as a “servi ce company” where the
principal part of a company’s income which is chargeable to corporation tax under Cases I and II
of Schedule D and Schedule E is not derived from
(a) carrying on a profession,
(b) providing professional services,
(c) having or exercising an office or employment,
(d) providing services or facilities (other than providing services or facilities to or for a
person or partnership not connected with the company) to or for any person or
partnership referred to in subparagraphs (i) to (v) of subsection (1)(c), or
(e) any 2 or more of the activities specified in paragraphs (a) to (d), the company shall
be deemed not to be a service company.”
2. As such to come with the charge to tax pursuant to TCA, section 441 it is necessary that the
principal part of a service company’ s income must be derived from the “carrying on of a
profession or the provision of professional services.”
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Material Findings of Fact
6. Evidence was given by on behalf of the Appellant and , the expert witness for
the Respondent.
Evidence of Appellant’s Witness
7. Based on evidence, I have made the following material findings of fact
(a) After graduating from and completing a Master’s degree in from ,
was employed as a research assistant in assisting on consultancy
work for government agencies. had tried to conduct the work through
but due to bureaucratical issues, a decision was taken to set up a private company,
to work on a specific project. After completing that project in 1996,
joined an English consulting group working in . In 1998, asked to
restart the company but ultimately a decision was taken to set a new company, the
Appellant, to engage in similar type projects.
(b) The Appellant’s main activity is in the implementation and delivery of . While
its main client is , it has also worked for the and other international
bodies such as .
(c) The Appellant is engaged in most types of public policy apart from transport
infrastructure, climate/environment, audit and similar activities. It has no clients in
Ireland and none of its services are delivered in Ireland.
(d) The Appellant has two directors and a core group of eight staff all of whom are
permanent employees. Notwithstanding that there are no specific educational
requirements, the directors and staff have various third level qualifications in public
administration; public finance; politics, education, international relations and
economics. The members of the team are not required to be specialists in any
particular discipline and the main requirement of staff/directors is an ability to deal
with a varied mix multi-disciplinary projects. Staff require both intellectual and
technical skills.
(e) Staff recruitment is based on a proven ability to work in the project based country,
previous relevant experience or having some connection with an administrative body
or in the designated country. It is necessary that staff demonstrate a knowledge of
the country’s internal workings or have a network of useful connections.

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