The High Court has upheld a Tax Appeals Commissioner determination that two directors of a Donegal company were entitled to Transborder Workers Relief for the 2015, 2016 and 2017 tax years.
Revenue appealed the determination by way of a Case Stated, asking the court to decide whether the Tax Appeals Commissioner had misinterpreted the statutory definition of a “proprietary director”. The appeal was heard on 11 April 2024. Mr Justice Oisín Quinn delivered judgment on 26 April 2024.
The facts found by the commissioner were not challenged. The two taxpayers were Irish residents living in County Donegal, and directors, shareholders and full-time employees of the company. Their employment duties were carried out exclusively in the UK, and their UK employment income was subject to UK PAYE and National Insurance contributions. They had claimed the relief on their Irish tax returns.
The company had 5,000 shares: 1,000 ordinary shares and 4,000 “A ordinary” shares. The taxpayers’ brother held the A ordinary shares, which carried no voting rights. The taxpayers were not beneficial owners of more than 15% of the company’s ordinary share capital. Revenue accepted that the taxpayers met the other requirements for relief, but argued that, because they held voting shares and had control of the business, they controlled the A ordinary shares and were therefore proprietary directors. That status would exclude them from the relief.
The taxpayers argued that the law concerned control of ordinary share capital, rather than control of the business. The court agreed. Justice Quinn said the statutory definition was linked to the shares themselves, which can include shares without votes. The brother retained control of the rights attached to his A ordinary shares, including the right to receive or enforce payment of a dividend if one was declared, and to pursue remedies as a shareholder where appropriate. The taxpayers could not direct him in exercising those rights.
The judge concluded that the taxpayers neither owned nor controlled more than 15% of the ordinary share capital. He answered “No” to all three questions put by the commissioner, including whether the commissioner had erred in deciding the taxpayers were entitled to relief and the assessments should be reduced to nil.
The High Court therefore upheld the commissioner’s determination. The judgment answers the legal questions in the Case Stated; it does not record a separate order beyond those answers.