Tax Appeals Commission determination 35TACD2023 regarding Corporation Tax, 2023

Administrative Decision Number35TACD2023
Date15 December 2022
Subject MatterCorporation Tax
A. Introduction
1. This matter comes before the Tax Appeal Commission (hereinafter “the
Commission”) as an appeal by the Appellant pursuant to section 959P(8) of
the Taxes Consolidation Act 1997 (hereinafter TCA 1997”) against a decision
by the Respondent that a letter dated 23 March 2015 sent to the Respondent
on behalf of the Appellant was not a genuine expression of doubt in respect of
the Appellant’s Corporation Tax return for the year ended 30th June 2014.
B. Background to Appeal
2. On 23 March 2015, the Appellant, acting by its tax agents, , submitted a
letter to the Respondent’s Large Cases Division,
in respect of its Corporation Tax return for the year end 30 June 2014. The
letter was headed Expression of Doubt and stated that the Appellant:-
“...hereby expresses doubt in accordance with Section 959P Taxes
Consolidation Act 1997 (“TCA 1997”) with respect to its corporation tax
return for the period ended 30 June 2014, as set out in detail below:-
Expression of Doubt
The expression of doubt specifically relates to the method by which the
depreciation adjustment in the corporation tax computation is calculated
historically and in the current and future periods for the purposes of Section
81 TCA 1997.
The somewhat unusual methodology has been followed by the company for a
number of years and certainly as far back as our records are available (2000
and we believe it applied beyond this also). This detail is set out below:
Each tax year, a portion of the property, plant and equipment
depreciation which relates to is taken from the profit
and loss account and is included as an element of trading stock in the
balance sheet. When these stocks are brought into use after
(i.e. a period ranging from to plus years), this
depreciation is released to the profit and loss account.
In addition there are certain instances where a portion of the
depreciation is reclassified within profit and loss account from
operating expenses to cost of goods sold.
As such, each tax year, a calculation is performed to identify the
correct adjustment to be made in the corporation tax computation in
respect of depreciation. This is to ensure that it is the element of
depreciation which is actually included in to the profit and loss
account in any given period which is adjusted out in calculating the
taxable trading profits of the company for corporation tax purposes.
We attach at Appendix 1 a schedule which shows an extract of this
calculation in respect of the periods ended 30 June 2005 to 30 June
2014 inclusive. The following to be noted from this schedule:
-the “Gross” line refers to the depreciation per the fixed asset note
in the financial statements for the period.
-the “To stock/COGS” line refers to the amount of depreciation
reclassified to the balance sheet and the amount reclassified
within the profit and loss account.
-the remaining lines ( , etc.) are the depreciation
included in the cost of goods sold in the profit and loss account for
the period.
As part of the preparation of the corporation tax return in respect of
the period ended 30 June 2014, a cumulative adjustment has been
included in the depreciation add back to reconcile to the depreciation
included in the profit and loss account for the periods ended 30th June
2007 to 30th June 2014 inclusive. The tax effect of the adjustment is
€1,588,382. The tax effect of the total depreciation added back in the
computation during the period ended 30th June 2014 is €372,145.
In summary, this adjustment results in ensuring that the depreciation
expensed to the profit and loss account reconciles to that included in
the corporation tax computations.
We would be grateful if you would please confirm your agreement with the
treatment in the current year and on a go forward basis…”
3. There followed an exchange of correspondence between the parties, during
which further information was provided by the Appellant. By letter dated 11
May 2016, the Respondent wrote to the Appellant’s agent stating as follows:-
Expression of doubt
We have now completed our review of all of the information. Based on the
information provided, we understand that the company has always added

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