The High Court has rejected Brian Fortune's attempt to overturn a Revenue assessment withdrawing tax relief granted on an IR£25,000 investment in five film production companies promoted by the Merlin Film Group.
Fortune invested in Stylefile Limited, Kavside Limited, Routeway Limited, Harlonian Limited and Newforge Limited in April 1995. The investment was made under the film tax incentive then contained in section 35 of the Finance Act 1987, which allowed qualifying investors to deduct part of their investment from taxable income.
Revenue granted Fortune relief in July 1996 after he submitted certificates from the production companies. Only one of the films originally associated with those applications, Angela Mooney Dies Again, was ultimately made, although the companies produced six other films.
In April 2004, Revenue told Fortune it was considering withdrawing the relief. It said part of the investment fund had passed through Galway company Concorde Anois Teo and that sufficient documentation had not been produced to establish that money transferred onwards to Transpacific Corporation A.V.V. Philippines had been spent on qualifying film production.
Revenue issued a withdrawal assessment in September 2005. Fortune challenged it by judicial review, arguing among other things that Revenue had exceeded its powers, had gone too far in tracing the expenditure, had breached a legitimate expectation created by the original relief and had delayed unreasonably.
Mr Justice O'Neill rejected each argument.
The judge held that Revenue had statutory authority to monitor compliance with all conditions attached to the relief, including conditions in ministerial certificates. That entitled Revenue to investigate the ultimate destination of expenditure rather than simply accept invoices between companies.
The court also held that Fortune could have no legitimate expectation that the relief was permanent because the legislation expressly permitted its withdrawal if qualifying conditions were later found not to have been met.
Although the delay extended over about eight years and was described as inordinate, the judge found it was not shown to be inexcusable or to have caused evidential prejudice sufficient to halt the assessment.
All reliefs sought were refused.