Tax Appeals Commission determination 64TACD2021 regarding Income Tax, 2021

• Administrative Decision Number: 64TACD2021
• Year: 2021
• Date: 27 January 2021
• Respondent: THE REVENUE COMMISSIONERS

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Between/

APPELLANT

Appellant

V

THE REVENUE COMMISSIONERS

Respondent

DETERMINATION

A. Matter under Appeal

1. This matter comes before the Tax Appeal Commission (hereinafter “the TAC”) as

an appeal against amended Notices of Assessment to income tax for the tax years

1997/98, 1998/99, 1999/00 and 2000/01, which were raised by the Respondent

on the 18th day of April, 2011.

B. Facts relevant to the Appeal

64TACD2021

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2. The appeal proceeded by way of oral hearing and I heard evidence from and

submissions on behalf of the parties over the course of three days.

3. At the beginning of the appeal hearing, it was agreed between the parties that in

deciding the preliminary issue of whether or not the assessments were raised

outside the four-year time pursuant to section 955 of the Taxes Consolidation Act,

1997 as amended (hereinafter “TCA1997”), the burden of proof lay on the

Respondent in relation to same and accordingly the Respondent entered into

evidence first.

4. In circumstances where the question of whether or not the amended assessments

were time-barred by operation of the relevant legislation was raised as a

preliminary issue, I believe it is necessary and appropriate to set forth in some

detail the history of the interchanges between the Appellant and the Respondent

which took place prior to raising of the amended assessments, as disclosed by the

documents and oral evidence presented to me in the course of the hearing.

5. The Appellant is a financial advisor and a director of

Limited (hereinafter referred to as “the Company”).

6. In or around 2005, the Respondent began an inquiry into the Company on foot of

having had sight of five cheques drawn on the Company’s Bank of Ireland account

and presented to FINANCIAL INSTITUTION 1 in the Isle of Man, copies of which

had been obtained by the Respondent on foot of a High Court Order. The five

cheques all had dates in 1999 and came to a total of IR£40,861.00, and all were

payable to FINANCIAL INSTITUTION 1.

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7. On the 5th of May 2005, the Respondent wrote to the Secretary of the Company

advising that its taxation affairs were the subject of an investigation and

requesting certain information in relation to the Company’s bank accounts.

8. Following an exchange of correspondence between the parties, the Company

identified the beneficiary of the cheques as Limited

(hereinafter referred to as “COMPANY 2”), having an address at

, Isle of Man, . This prompted further enquiries from the

Respondent, seeking information as to the nature of the relationship between the

Company and COMPANY 2.

9. On the 28th of November 2005, the Company wrote to the Respondent and advised

that it had been in a commission-sharing relationship with COMPANY 2 on foot

of COMPANY 2 having introduced a business idea and design of a highly profitable

FINANCIAL product to the Company. The letter set out details of the commission-

sharing arrangement, along with the details of the increase in commissions which

had come about as a result of COMPANY 2’s introduction of the business idea and

FINANCIAL product to the Company. In addition, the letter concluded:-

“I do not and have not had any beneficial interest in COMPANY 2 either directly

or indirectly. When I paid the commission I sent a note of the amount earned

and their split. Commission sharing ceased in 1999 as the scheme had run its

course and the FINANCIAL product was no longer attractive to clients.”

10. On the 7th of February 2006, the Respondent wrote to the Company seeking

further information in relation to the Company’s dealings with COMPANY 2 and

by letter dated the 3rd of March 2006, the Company responded, setting out details

of previous commission-sharing arrangements that it was aware of, and also

setting out details of the approach that it had received from COMPANY 2 in 1997