The High Court upheld an Appeal Commissioner’s decision that a 2005 Revenue assessment seeking to withdraw film-investment tax relief from Liam Lacey was made out of time and was void.
Revenue had appealed the Commissioner’s ruling on a case stated under section 941 of the Taxes Consolidation Act 1997. The dispute concerned an income-tax assessment for 1994/95, raised on 26 July 2005. The High Court judgment was delivered by Mr Justice Binchy on 31 July 2015.
Lacey invested IR£25,000 in April 1995 across five companies collectively known as the First Merlin Film Fund. He received five Film 3 certificates in January 1996 and claimed relief under section 35 of the Finance Act 1987 in his tax return. Revenue initially allowed the claim.
After an audit of the companies in 2002, an inspector concluded that conditions for the relief had not been met. The inspector was not satisfied that money transferred to Transpacific Corporation A.V.V. Aruba had been spent on film production. Revenue withdrew the relief and assessed Lacey for €15,235.12. The judgment records that fraud or neglect by Lacey was not alleged.
Revenue argued that section 481(19) allowed relief to be withdrawn “at any time” and that the assessment arose from information about the companies, rather than a matter contained in Lacey’s return. Lacey argued that the four-year limit in section 955(2) applied, and that the general wording in section 481(19) did not expressly disapply the self-assessment rules in Part 41.
Justice Binchy found that the general phrase “notwithstanding anything in the Tax Acts” did not expressly disapply Part 41. He also concluded that the assessment was made by reason of the relief claim in the return. The court considered that Revenue’s audit and enquiries into the film companies must have occurred outside the four-year period.
The judge therefore held that the Appeal Commissioner was correct in law to allow Lacey’s appeal and determine the assessment void as out of time. The case concerned the time-limit issue. The judgment says the result would govern similar appeals by 964 other taxpayers at least on that issue; it does not determine whether the film-relief conditions were satisfied in those appeals.