The High Court has refused Robert Stanley’s application to quash a Capital Acquisitions Tax assessment issued outside the usual four-year time limit.
The assessment related to Stanley’s November 2007 CAT return, which claimed a credit for capital gains tax paid by his father. Revenue considered the credit was not due because the asset had been disposed of within two years of the gift or inheritance. It said the return was therefore incorrect and that the assessment could be raised outside the four-year limit on grounds of neglect.
Stanley argued that Revenue could not escape the time limit merely by deciding that a return was incorrect. He said that reading would make the statutory exceptions for fraud or neglect redundant and undermine the four-year limit. No fraud issue arose. The central question was the meaning and effect of the statutory neglect exception.
Mr Justice Hedigan said the assessment had been issued outside the four-year period. He rejected Stanley’s argument that the legislation required a different interpretation, holding that an assessment could issue outside the limit if the return was found to be incorrect.
The judge said whether the return was correct was a matter of mixed fact and law for the Appeal Commissioners. If they found the return incorrect, the time-limit exception would apply; if they found it correct, the assessment would fall under the four-year rule. The High Court would not decide the disputed tax-credit issue in these proceedings, which remained for the Appeal Commissioners.
The application was refused. The court did not determine whether the credit was actually due or whether Stanley had a CAT liability. It also did not need to address the other issues raised in the application.