The High Court has ruled that neither of two Revenue assessments for capital gains tax on a €1,174,498.72 payment from an offshore trust can stand, overturning a Tax Appeals Commission determination that had upheld one of them.
Mr Justice Mark Sanfey gave the ruling on 16 February 2024 in a case stated by the Commissioner for the court’s opinion. The case concerned a payment John McMahon received on 7 April 1999 from the Berisford Trust, a discretionary trust resident in the Isle of Man.
The trust’s payment followed the sale of shares in Meadowsfreight (Ireland) Limited. The High Court record states that the trust gain accrued on 4 March 1999 and that Mr McMahon received the payment the following month. Revenue raised two alternative assessments in 2016, each for €234,645: one for the tax year ending 5 April 1999 and one for the year ending 5 April 2000.
The Commissioner had ruled that the 1999/2000 assessment should stand, while the assessment for 1998/99 should not. Mr Justice Sanfey found that the timing requirements in section 579A of the Taxes Consolidation Act 1997 were not met for the 1999/2000 assessment. The trust gain arose in the 1998/99 tax year, but the payment to Mr McMahon was made in 1999/2000. The provision required the capital payment to be received in the same tax year as the trust gain or in an earlier year, the judge said.
The court also upheld the Commissioner’s conclusion that Revenue’s 2014 information gathering under section 908 did not itself constitute an enquiry into Mr McMahon’s return for the purposes of the four-year limit in section 956. Information obtained through the court orders gave Revenue reasonable grounds to make enquiries about the omitted payment after that period. The judge said the omission of such a substantial payment could provide reasonable grounds to believe the return was negligently completed; he did not hold that negligence had been proved.
The separate assessment for 1998/99 had been based on Revenue’s claim that Mr McMahon beneficially owned shares in the company. The Commissioner had found insufficient evidence to establish that, and the High Court left that finding undisturbed.
Mr Justice Sanfey answered questions I to III in the case stated “No”, question IV “Yes”, and questions VIII to XI “Yes”. He did not answer questions V to VII or XII to XV because his conclusions disposed of the substantive issues. He concluded that both assessments could not stand. A brief hearing was listed for 22 February 2024 to address the form of the order and costs; the judgment does not state the outcome of that hearing.