The High Court has quashed an Appeal Commissioner’s 2015 determination in a dispute over tax relief claimed by Sarlingford Limited for a patented manufacturing process, ruling that the appeal was decided on an issue that was not properly before the commissioner.
Mr Justice Brian J. McGovern found that the appeal concerned Revenue’s decision that the invention did not involve “radical innovation”. Instead, the Appeal Commissioner decided the matter on the basis that the relief could not apply to accounting periods before 2012. The court held that the time-limit issue was not part of Revenue’s original determination or the appeal as set out in the appeal form. The applicant had not been heard on the radical-innovation issue that was before the commissioner.
The company makes windows and doors and holds Irish and UK patents for an apparatus used in their automated manufacture. It applied in December 1996 for a determination that the invention qualified for tax relief. Revenue requested supporting material in February 1997, but the judgment says the company did not respond and the application remained dormant for years. Correspondence resumed in 2009. Revenue refused the application in April 2012, saying the evidence had not demonstrated radical innovation.
The company appealed, and the Appeal Commissioner issued the determination now quashed in January 2015. The company also lodged a protective appeal to the Circuit Court. The High Court rejected the respondents’ argument that this alternative remedy was a reason to refuse judicial review, finding that the radical-innovation issue should first be determined.
The judgment also addressed when any relief could apply if the company ultimately qualifies. The court rejected Revenue’s position that relief could only run from the accounting period in which a determination was made. It held that, if relief is granted, it should run from the date of the company’s first application, subject to the question of whether the period is limited to four years. The judgment notes that the relief was no longer available for distributions made on or after 24 November 2010.
The court rejected the company’s claims based on legitimate expectation and Revenue’s customer service charter. It found no representation promising a positive determination and no basis for relief under the charter.
The High Court ordered certiorari quashing the Appeal Commissioner’s 15 January 2015 determination and granted specified declarations. It left the four-year limitation issue for determination at a rehearing or appeal, and said it would hear counsel on the form of the order. The judgment did not decide whether the invention involved radical innovation or whether the company is entitled to relief.