Tax Appeals Commission determination 164TACD2022 regarding Capital Gains Tax, 2022

• Administrative Decision Number: 164TACD2022
• Year: 2022
• Date: 06 October 2022
• Subject Matter: Capital Gains Tax
• Respondent: THE REVENUE COMMISSIONERS

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164TACD2022

Between

Appellant

and

THE REVENUE COMMISSIONERS

Respondent

Determination

Introduction

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

as an appeal against an assessment to Capital Gains Tax (“CGT”) for 2015 which was

raised by the Revenue Commissioners (hereinafter “the Respondent”) on 27th April

2018. The Appellant makes his appeal in accordance with the provisions of section

945 Taxes Consolidation Act 1997 (“TCA 1997”).

2. The oral hearing took place before the Commissioner on 12th September 2022. Both

the Appellant and the Respondent were represented at the hearing by Counsel.

3. The amount of tax at issue is €130,000.

Background

4. The Appellant carried on the trade of a fisherman. On 21st October 2015 the Appellant

entered into a Memorandum of Agreement (“Memorandum”) for the sale of his fishing

vessel and its related capacity/tonnage (this refers to the type and amount of fish that

a fishing vessel is lawfully allowed to catch).

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5. The Appellant submitted his CGT computation on the basis that the disposal took place

in the tax year 2016. In that computation, the Appellant claimed entrepreneurial relief

under section 597AA TCA 1997. This relief was introduced on 1st January 2016 and

subject to certain conditions being fulfilled permitted a taxpayer to pay CGT at the

reduced rate of 20% (rather than the standard rate of 33%) on the first €1 million of a

chargeable gain where the taxpayer has disposed of their business. As the Appellant

had disposed of his fishing vessel and related capacity/tonnage, he was deemed to

have disposed of his business and had he so done on a date on or after 1st January

2016, he would have been entitled to claim entrepreneur’s relief in calculating his

liability to CGT.

6. On 31st January 2017, the Respondent initiated an aspect query in relation to the

Appellant’s tax affairs and requested the Appellant to provide it with a copy of his

financial accounts for the year ended 31st December 2015 and a capital gains tax

computation in relation to the disposal of assets which occurred in that year.

7. The Appellant’s agent replied to this correspondence on 8th March 2017 and included

a copy of the Appellant’s financial accounts for the thirteen month period ended 31st

January 2016 marked “cessation” and a copy of the Appellant’s 2016 capital gains tax

computation.

8. On 14th March 2017, the Respondent thanked the Appellant’s agent for his

correspondence of the 8th March 2017 and requested-

(a) Details of the basis for the claim for Entrepreneur Relief.

(b) The date(s) of sale of the assets and supporting documentation.

9. On 25th April 2017, the Appellant’s agent replied and advised that the Appellant had

sold his fishing vessel and associated tonnage. The agent also advised that the

Appellant was a “relevant individual” (meaning he fulfilled the legislative requirements

for entrepreneur’s relief) and they enclosed a copy of the Memorandum which was

dated 21st October 2015. The agent further advised in that correspondence that “ the

disposal took place in January after the conditions of the Memorandum of Agreement

had been fulfilled” and they attached copies of bank statements which showed that the

sale proceeds of were received on the following dates.

- 17th December 2015 €

- 19th January 2016 €

- 10th February 2016 €