Revenue wins appeal relating to €536,000 tax assessment

The Revenue Commissioners has won an appeal concerning the ability to interfere with its entitlement to raise income tax assessments of some €536,000 against a man who argued a €12,500 payment by him precluded the Revenue doing do.

The appeal concerned whether a tax appeals commissioner and/or the Circuit Court had jurisdiction to decide whether the alleged liability in the assessments was compromised by the man’s earlier payment.

In a judgment this week, the three-judge Court of Appeal (CoA) upheld the Revenue argument there was no such jurisdiction.

The case dates back to 2008 when Revenue announced a voluntary disclosure initiative for people holding untaxed funds in domestic deposit accounts. Applicants had to submit a notice of intention to make a disclosure by September 15th, 2008 and had to make full payment and disclosure by January 15th, 2009.

Accountants for the man submitted the required notice in September 2008 concerning untaxed funds deposited by him in a named financial institution.

His solicitor wrote to Revenue on January 9th, 2009 enclosing a €12,500 cheque, saying, inter alia, that was the maximum amount his client could raise at that point. The latter stated it may be he “does not owe this much tax or it may transpire he owes something more”.

The Revenue acknowledged receipt of that “submission” and stated its reply should be regarded as a receipt for payment of €12,500. In later correspondence, it sought information concerning the €12,500 offer and the man’s solicitor argued the €12,500 was offered on the terms set out in the January 9th letter and was accepted as such.

The Revenue refused to accept that and offered to return the sum while the man’s solicitor insisted the liabilities were settled.

Notices of assessment

In December 2010, Revenue issued notices of assessment to the man for the years 2000-2006 and notice of amended assessment for the years 2007-2009 inclusive. Those assessed his aggregate tax liability to income tax at €536,322.

He appealed the assessments as estimated and excessive. He claimed, for the tax years to December 31st, 2008, a settlement was made with Revenue and the €12,500 sum was accepted in “full and final” satisfaction.

The matter went before a tax appeals commissioner who, in May 2013, rejected Revenue’s argument he had no jurisdiction to determine whether or not a settlement had been reached with the man.

The commissioner went on to find, on the evidence, no such settlement had been agreed and he confirmed the assessments.

The man appealed to the Circuit Court under a right of appeal since abolished by the Finance Tax Appeals Act 2015.

The Circuit Court decided it had no jurisdiction to decide if a settlement had in fact been agreed by Revenue and also upheld the assessments under appeal. The Circuit Court judge decided to refer legal issues for determination by the High Court.

The High Court ruled neither the appeals commissioner nor the Circuit Court had jurisdiction to decide claims of legitimate expectation, or whether Revenue was stopped from raising the assessments against the man by virtue of his €12,500 payment.

However, the High Court also found that both the commissioner and the Circuit Court (at the time) had power to determine if Revenue had compromised a tax liability.

Upheld claim

Giving the CoA judgment allowing Revenue's appeal over that decision, Mr Justice Brian Murray upheld Revenue's claim the High Court erred in finding the appeals commissioner and Circuit Court (under the provisions of the Tax Acts in force at the time) had such a power.

He agreed with the High Court that a Circuit Court judge hearing an appeal from an appeals commissioner does not have jurisdiction to determine whether the parties to an appeal have entered into a settlement in respect of the liability at issue in the appeal.