The High Court has dismissed Ronan McNamee’s challenge to a Revenue notice withdrawing a tax advantage of €6,242,115.26 arising from a 2007 investment transaction involving him and his wife.
Mr Justice Brian J. McGovern ruled that the nominated officer formed the opinion that the transactions were tax avoidance transactions on 24 August 2011, after receiving an investigation report two days earlier. The notice was issued immediately after the opinion was formed, as required by section 811(6) of the Taxes Consolidation Act 1997, the judge found.
The notice said the tax advantage to be withdrawn was €5,121,107.60, with a surcharge of €1,121,007.66. The Revenue’s case concerned a foreign exchange straddle contract and a gilt forward contract, together called the Straddle Transaction. The judgment said the contracts produced a foreign exchange loss of about €25.6 million and a gilt gain of about €25.4 million, while the couple’s actual monetary loss was under €250,000. The claimed losses were set against gains from earlier disposals.
Mr McNamee argued that Revenue had formed its opinion well before August 2011, pointing to internal correspondence, proposed legislative changes and notices issued to other taxpayers in the “Schroders Ready-Made 26” group. He said the cases had been treated as one scheme, that the nominated officer’s decision was tainted by prejudgment or bias, and that he had not been given a fair opportunity to make representations because Revenue refused to provide the report prepared for the officer.
The court accepted that Revenue had examined the group for patterns of possible tax avoidance, but found no evidence it had treated the 26 taxpayers as one case or formed the statutory opinion for the group as a whole. The judge said each taxpayer’s circumstances and tax consequences had to be assessed individually. He also found no evidence of prejudgment or actual or apparent bias.
On fairness, the judgment noted that Revenue had invited submissions through the applicant’s tax agent before the report was sent to the nominated officer, but Mr McNamee did not make them. It also found that statutory appeal routes were available, including an appeal to the Appeal Commissioners, which he had not pursued beyond initiating an appeal. The court held there had been no breach of natural or constitutional justice and that the appeal process was an effective alternative remedy.
The court extended time for two amended judicial review grounds, finding no material prejudice to Revenue. It nevertheless concluded that Mr McNamee was not entitled to the relief sought. The judgment does not state a separate costs order.