The High Court has upheld a Tax Appeals Commissioner’s determination that a taxpayer could not rely on a four-year time limit to challenge an amended income tax assessment for 2005. Mr Justice Nolan answered “no” to all seven questions of law referred to him in a case stated, leaving the Commissioner’s determination undisturbed.
The case concerned a preliminary issue in the taxpayer’s appeal against an amended assessment issued by the Revenue Commissioners on 6 December 2011. The assessment concerned a transaction involving Tramult Ltd, a company incorporated in December 2005. The taxpayer, a minority shareholder, received €394,697 from its liquidation after rights attached to shares held by Mulcahy McDonough and Partners Ltd were transferred to shares held by the taxpayer and other shareholders.
The taxpayer’s 2005 return did not include details of the transfer or distribution. He argued that the amended assessment was outside the four-year limit in section 955 of the Taxes Consolidation Act 1997. He said the disposal was subject to capital gains tax, but produced no capital gains tax liability because the consideration matched the shares’ acquisition cost. He also relied on his understanding, based on tax advice, that no liability arose.
The Commissioner found that the taxpayer had not made a full and true disclosure of all material facts in his return, so he could not use the section 955 time limit to prevent the amended assessment. She also rejected his claims that a company filing to the Companies Registration Office had been submitted to Revenue and that a Revenue letter about Tramult’s affairs amounted to tax clearance for his own tax position.
Before the High Court, the taxpayer argued that the Commissioner had failed to address section 956, which concerns Revenue enquiries, and had not given adequate reasons. Revenue argued that sections 955 and 956 address different matters. Mr Justice Nolan held that the preliminary issue before the Commissioner concerned section 955 and that section 956 did not alter its meaning. He also said it was not appropriate to decide a separate argument about whether Revenue’s enquiries were out of time, because that point had not formed a material argument before the Commissioner.
The judge said a taxpayer’s belief that a return was accurate did not determine whether it contained a full and true disclosure. The transaction should have been disclosed even if the taxpayer believed no tax was due. He found that the Commissioner had given clear reasons and that there was no basis to overturn her findings. The court did not rehear the underlying tax appeal or determine the final tax liability; it answered the questions on the preliminary issue, all in the negative.