Tax Appeals Commission determination 105TACD2023 regarding PREM, Corporation Tax, 2023

• Administrative Decision Number: 105TACD2023
• Date: 01 June 2023
• Subject Matter: PREM, Corporation Tax
• Respondent: THE REVENUE COMMISSIONERS

1

105TACD2023

Between

Appellant

and

THE REVENUE COMMISSIONERS

Respondent

Determination

2

Contents

Introduction ........................................................................................................................... 3

Background ........................................................................................................................... 3

Legislation and Guidelines .................................................................................................... 5

Documentation Presented to the Commission ...................................................................... 7

Witness Evidence ............................................................................................................... 22

The Appellant Director ..................................................................................................... 22

The Appellant’s and the Appellant Director’s Accountant ................................................. 23

– Bank .............................................................................. 24

– The Appellant Director’s and the Appellant’s Solicitor ................. 25

– The Appellant Director’s Daughter ...................................................... 25

– The Appellant’s Company Accountant ......................................... 28

Submissions ....................................................................................................................... 31

Appellant ......................................................................................................................... 31

Respondent ..................................................................................................................... 34

Material Facts ..................................................................................................................... 38

Analysis .............................................................................................................................. 41

Determination ..................................................................................................................... 45

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Introduction

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

as an appeal against Notices of Estimation of Amounts Due (“the Estimation”) for Income

Tax (PAYE), Social Insurance Contributions (PRSI), Universal Social Charge (USC) and

Local Property Tax (“LPT”) – (hereinafter “PREM”) and amended notices of assessment

to Corporation Tax (hereinafter “CT”) raised by the Revenue Commissioners (“the

Respondent”) on 16th December 2021 and 21st June 2022. The amount of tax sought on

the PREM Estimations is €56,616 for 2016 and €92,090 for 2017. The amount of tax

sought on the CT assessments is €67,046 for 2016 and €8,392 for 2017. These amounts

of tax are exclusive of interest and penalties. The Appellant makes its appeal in

accordance with the provisions of section 990 and section 933 of the Taxes Consolidation

Act 1997 (“TCA 1997”).

2. The PREM Estimations in the sum of €148,706 and the amended notices of assessment

to CT in the sum of €75,438 were appealed under the reference numbers 158/22 and

760/22. Following a direction of the Commission on 12th October 2022, in accordance

with the provisions of section 949E (2) (b) TCA 1997, the appeals were heard at the same

time under the merged reference number 158/22 as similar facts are in issue.

3. The appeal concerns whether certain payments made to (“the

Appellant Director”) and his business partner, (“the partner”) were

for their benefit or whether the Appellant purchased and acquired three properties from

the Appellant Director and one property from the Appellant Director and his partner in

2016.

Background

4. The Appellant is a private limited company, tax resident and incorporated in Ireland. For

CT purposes, the Appellant is considered a “close company” under section 430 TCA

1997. A close company is defined as an “a company under the control of 5 or fewer

participators, or of participators who are directors”. “Participators” in this context is

generally taken to mean “shareholders”.

5. The tax implications of a company being deemed a close company is that it is subject to

certain specific anti-avoidance provisions of the TCA 1997. In the Appellant’s case, the

relevant applicable provision is section 438 TCA 1997 which requires that any sums in

the form of a loan or advance paid to the Appellant Director are required to be made

under the deduction of tax. In addition, under section 122 TCA 1997, if the Appellant

Director is deemed to acquire a loan from the Appellant and does not pay interest on that