The Court of Appeal has quashed a Revenue assessment of €7,064,630 against Robert Stanley, ruling that it was issued outside the statutory four-year time limit. The court allowed Stanley’s appeal against a High Court decision that had refused to quash the assessment.
The assessment, issued on 5 December 2013, concerned Capital Acquisitions Tax (CAT), interest and penalties following a 2007 transfer of shares from Stanley’s father. Stanley had paid €3,421,807 for shares valued at €17,109,037. The difference was treated as a gift. A credit for Capital Gains Tax paid by his father meant Stanley self-assessed his CAT liability at nil.
Revenue said the credit should be withdrawn because a later share subscription by Belmayne Ireland Limited diluted Stanley’s holding. It argued the transaction counted as a disposal within two years of the gift and that Stanley’s return was therefore incorrect. The court noted that the parties agreed Stanley had not sold shares to Belmayne; the company acquired its majority holding by subscribing for new shares. Whether that transaction was a disposal for CAT purposes, and the amount of any CAT due, were not decided in these judicial review proceedings.
Stanley filed his CAT return in November 2007. He argued the four-year limit applied because he had delivered a correct return and Revenue’s assessment came more than six years later. Revenue also argued that the return lacked relevant details about the CGT credit. The judgment records that details of the Belmayne transaction and a copy of the share subscription agreement had been sent to Revenue in April 2007.
The Court of Appeal held that the CAT return and the taxpayer’s self-assessment on that return were distinct statutory requirements. It found that Stanley had correctly completed the return’s information sections and that Revenue’s prescribed form asked for the amount of a CGT credit but did not provide for an explanation in its assessment section. The court said the self-assessment did not have to match the amount Revenue later considered correct, provided it reflected the taxpayer’s best knowledge, information and belief. Revenue had not disputed that standard was met.
The court also rejected the view that the Appeal Commissioners could decide whether the assessment itself was lawful. That jurisdictional issue could be determined through judicial review. It held that the return was correct, the four-year limit had not been displaced by fraud or neglect, and the late assessment was ultra vires. The appeal was allowed and the notice of assessment quashed. The court did not determine the amount of any tax liability.