Tax Appeals Commission determination 01TACD2022 regarding Income Tax, 2022

• Administrative Decision Number: 01TACD2022
• Date: 29 October 2021
• Subject Matter: Income Tax
• Appellant: REVENUE COMMISSIONERS
• Respondent: Appellant

01TACD2022

Appellant

V

REVENUE COMMISSIONERS

Respondent

DETERMINATION

Introduction

1. This is an appeal against amended assessments to income tax against the Appellant for

the tax years 2012 and 2013, dated 25th June 2015. The additional income tax liabilities

for 2012 and 2013 are €65,032 and €29,907 respectively. The Appellant appealed both

amended assessments.

2. The Appellant, a general medical practitioner, asserted that he transferred his medical

practice to an unlimited company, , (the Company) in November 2011 for a

consideration of €416,773. However the Respondent disagreed that such a transfer

took place and raised amended assessments on the basis that no legally effective

transfer of the business took place in 2011, and, therefore, that the General Medical

Scheme (GMS) income from patients under the contract with the Health Services

Executive (HSE) remained personal to the Appellant as his share of the partnership

income for the years 2012 and 2013 and should be directly assessed on the him.

Issue

3. The issue to be decided in this appeal is whether the Appellant should be assessed

personally on the income derived from his contract with the HSE on the provision of

GMS services to medical card patients or whether such income was properly assessed on

the Company.

Legislation

4. The charge to tax under Schedule D is governed by TCA, section 18(1) and relates to:

"(a) the annual profits or gains arising or accruing to —

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(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, …"

5. TCA, section 52 TCA identifies the person chargeable to tax and states:

"Income tax under Schedule D shall be charged on and paid by the persons ...

receiving or entitled to the income in respect of which tax under that Schedule is

directed in the Income Tax Acts to be charged."

Material findings of Fact

The Appellant

6. Based on the Appellant’s evidence, I have made the following material findings of fact:

(a) After graduating from medical school in , he worked in various hospitals in

the UK, New Zealand and the Channel Islands, before returning to the to train

as a general practitioner.

(b) He moved to Ireland in 20 and worked for several months in a GP practice. He

is a specialist General Practitioner and is registered with the Irish Medical Council.

Later in 20 , he was employed by in a GP practice as a salaried

doctor. After a year in that practice, he was offered and accepted the opportunity of

working in a partnership with . As such the Appellant cou ld either buy into the

practice at cost of €220,000 to €250,000 or by working additional hours for a period

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of 4 years until he worked up parity. He chose the latter and commenced in

partnership with 1st January 20 . A partnership agreement was executed

and provided for the manner in which the parties would conduct their affairs. The

partnership also rented the premises from and his wife.

(c) Thereafter he applied for and obtained a new GMS number with the HSE to become

entitled to treat medical card patients from the HSE panel. As it was a new panel, the

Appellant started with no patients but built up a patient list over the years.

(d) The Appellant signed an agreement with the HSE on 14th April 20 . The following

provisions are relevant:

"The medical practitioner shall provide services or arrange for the provision of

services in accordance with these terms and conditions in the schedule to this

agreement to persons entitled to services under Section 58 of the Act.

….

I undertake, as long as the agreement is in force, not to change my places of

attendance or days or hours of attendance so as to materially affect the convenience

of my patients in the area in which I am practising on entering into the agreement or

to reside beyond reasonable access to the places of attendance listed above."

….

The number of patients whose names may be placed on the list of the practitioner, or

in the case of a practitioner who has agreements with two or more Health Boards,

the total of the numbers which may replace on the lists for those Boards shall not

exceed 2,000, save for the Board or the Boards, in exceptional circumstances, after

consultation with the IMO, decide to apply a higher limit."

(e) All of the income paid by the HSE in respect of the Appellant’s patients was paid into

the partnership bank account.