Tax Appeals Commission determination 34TACD2021 regarding VAT & Income Tax, 2021

• Administrative Decision Number: 34TACD2021
• Year: 2021
• Date: 26 June 2008
• Respondent: REVENUE COMMISSIONERS

1

34TACD2021

BETWEEN/

NAME REDACTED

Appellant

V

REVENUE COMMISSIONERS

Respondent

DETERMINATION

Introduction

1. This is an appeal against assessments to value-added tax (‘VAT’) and to income tax.

The VAT assessments totalling €118,551 relate to the tax years of assessment 2008 to

2012 and the assessments to income tax totalling €178,765 relate to the tax years of

assessment 2008 to 2011.

2. The VAT and income tax assessments were raised in relation to payments received by

the Appellant from [company name redacted] Ltd., (hereafter ‘ABL’’) during the years

2008 to 2012. The nature of these payments was a matter of dispute between the

parties. The Appellant claimed the payments were received on foot of a profit sharing

joint venture agreement between the Appellant and ABL and were not subject to VAT.

The Respondent contended that the payments related to the provision of consulting

and training services by the Appellant and were subject to VAT accordingly.

3. In relation to the assessments to income tax, the Appellant claimed that the joint

venture was a continuation of his sole tradership in the manufacture and provision of

fitted kitchens. The Appellant submitted that the losses generated in that business

2

were available for offset against his share of the alleged joint venture profits pursuant

to section 382 TCA 1997. The Respondent submitted that the trade in which the losses

were generated, was not the same trade as the trade against which the Appellant

sought to offset the losses.

4. The third issue between the parties related to the sale of machinery by the Appellant

on which VAT had been charged but not returned. The Appellant’s position was that

he was taxed on a receipts basis but had not received payment in respect of the

invoice. The Appellant instituted proceedings against ABL for the outstanding sum.

The proceedings were settled and the settlement of the proceedings formed part of a

settlement agreement dated in September, 2018. Pursuant to the settlement

agreement, ABL agreed to pay the Appellant €550,000 in full and final settlement of

all claims.

5. Following an audit, the Respondent raised VAT assessments on 30 October, 2013, and

income tax assessments on 23 November, 2013. The Appellant duly appealed.

Background

6. The Appellant operated as a sole trader trading under the style and title of ‘[redacted]’

in relation to the manufacture and provision of fitted kitchens since approximately

[year redacted]. During the years 2004 to 2008 the appellant incurred significant

losses in this trade.

7. On or about June 2008, ABL entered into an arrangement with Bank of Ireland Finance

Limited. The Respondent submitted that ABL through this arrangement, took over the

financing arrangements that had been in place between the Appellant and [finance

company]. The Appellant’s position was that ABL agreed to make payments to [finance

company] on the Appellant’s behalf. On 28 June 2006, the Appellant sold certain

machinery to ABL. The Appellant invoiced ABL for €200,000 plus VAT of €42,000 by

invoice of same date. The Appellant stated that he did not sell all of his machinery but

merely those items detailed on the invoice.

8. The Appellant agreed to train ABL staff in the use of the machinery and in a sales

capacity. The Appellant received round sum payments from ABL of between €10,000

and €13,700 per month in relation thereto. The Appellant claimed that these