Finance Act 2014

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Amendment of general anti-avoidance rule

87. (1) Chapter 2 of Part 33 of the Principal Act is amended—

(a) in section 811 by inserting the following subsection after subsection (13) of section 811:

“(14) This section shall only apply to a transaction which was commenced on or before 23 October 2014.”,

(b) in section 811A by—

(i) inserting the following subsection after subsection (2):

“(2A) (a) In this subsection ‘qualifying avoidance disclosure’ means a disclosure that the Revenue Commissioners are satisfied is a disclosure of complete information in relation to, and full particulars of, a transaction that is a tax avoidance transaction or that, had the Revenue Commissioners formed the opinion that the transaction was a tax avoidance transaction, would occasion a liability to tax pursuant to section 811, made in writing to the Revenue Commissioners and signed by or on behalf of that person and which is accompanied by—

(i) a declaration, to the best of that person’s knowledge, information and belief, made in writing, that all matters contained in the disclosure are correct and complete, and

(ii) a payment of any tax due and payable in respect of any matter contained in the disclosure and the interest payable on the late payment of that tax.

(b) Where on or before 30 June 2015 the Revenue Commissioners receive a qualifying avoidance disclosure in relation to a transaction then—

(i) the surcharge referred to in subsection (2) shall not apply, and

(ii) the amount of any interest payable under the Acts shall be the amount that, apart from this subparagraph, would be so payable reduced by 20 per cent of that amount.”,

(ii) inserting the following after subsection (7):

“(8) This section shall only apply to a transaction which was commenced on or before 23 October 2014.”,

(c) by inserting the following sections after section 811B:

“Transactions to avoid liability to tax

811C. (1) (a) In this section and section 811D—

‘the Acts’ means—

(i) the Tax Acts,

(ii) the Capital Gains Tax Acts,

(iii) the Value-Added Tax Consolidation Act 2010 , and the enactments amending or extending that Act,

(iv) the Capital Acquisitions Tax Consolidation Act 2003 , and the enactments amending or extending that Act,

(v) the Stamp Duties Consolidation Act 1999 , and the enactments amending or extending that Act, and

(vi) Part 18D,

and any instruments made thereunder;

‘assessment’ includes any assessment to tax made under any provision of the Acts including any amended assessment, correcting assessment and any estimate or estimation;

‘business’ means any trade, profession or vocation;

‘Revenue officer’ means an officer of the Revenue Commissioners;

‘tax’ means any tax, duty, levy or charge which in accordance with the Acts is placed under the care and management of the Revenue Commissioners and any interest or other amount payable pursuant to the Acts;

‘tax advantage’ means—

(i) a reduction, avoidance or deferral of any charge or assessment to tax, including any potential or prospective charge or assessment, or

(ii) a refund of or a payment of an amount of tax, or an increase in an amount of tax, refundable or otherwise payable to a person, including any potential or prospective amount so refundable or payable,

arising out of or by reason of a transaction, including a transaction where another transaction would not have been undertaken or arranged to achieve the results, or any part of the results, achieved or intended to be achieved by the transaction;

‘tax avoidance transaction’ has the meaning assigned to it by subsection (2) ;

‘transaction’ means—

(i) any transaction, action, course of action, course of conduct, scheme, plan or proposal,

(ii) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable or intended to be enforceable by legal proceedings, and

(iii) any series of or combination of the circumstances referred to in paragraphs (i) and (ii),

whether entered into or arranged by one person or by 2 or more persons—

(I) whether acting in concert or not,

(II) whether or not entered into or arranged wholly or partly outside the State, or

(III) whether or not entered into or arranged as part of a larger transaction or in conjunction with any other transaction or transactions.

(b) This section and section 811D shall apply notwithstanding any other provision of the Acts.

(2) (a) Subject to paragraph (b), for the purposes of this section a transaction shall be a ‘tax avoidance transaction’ if having regard to the following matters—

(i) the form of that transaction,

(ii) the substance of that transaction,

(iii) the substance of any other transaction or transactions which that transaction may reasonably be regarded as being directly or indirectly related to or connected with, and

(iv) the final outcome of that transaction and any combination of those other transactions which are so related or connected,

and having regard to any one or more of the following matters—

(I) the results of the transaction,

(II) its use as a means of achieving those results,

(III) any other means by which the results or any part of the results could have been achieved,

it would be reasonable to consider that—

(A) the transaction gives rise to, or but for this section would give rise to, a tax advantage, and

(B) the transaction was not undertaken or arranged primarily for purposes other than to give rise to a tax advantage.

(b) For the purpose of this section, a transaction shall not be a tax avoidance transaction if, having regard to the matters set out in paragraph (a) —

(i) notwithstanding that the purpose or purposes of the transaction could have been achieved by some other transaction which would have given rise to a greater amount of tax being payable by the person, the transaction—

(I) was undertaken or arranged by a person with a view, directly or indirectly, to the realisation of profits in the course of the business activities of a business carried on by the person, and

(II) was not undertaken or arranged primarily to give rise to a tax advantage,

or

(ii) the transaction was undertaken or arranged for the purpose of obtaining the benefit of any relief, allowance or other abatement provided by any provision of the Acts and the transaction did not result directly or indirectly in a misuse of the provision or an abuse of the provision having regard to the purposes for which it was provided.

(3) A person shall not be entitled to any tax advantage arising out of or by reason of a tax avoidance transaction to which this section applies.

(4) (a) Where a person submits any return, declaration, statement or account or makes any claim which purports to obtain the benefit of a tax advantage arising out of or by reason of a tax avoidance transaction, a Revenue officer may at any time deny or withdraw the tax advantage.

(b) Without prejudice to the generality of paragraph (a), it shall be a lawful exercise of the powers conferred by that paragraph to do one or more of the following acts, and accordingly that paragraph shall be read as permitting, for the purposes of that paragraph, a Revenue officer to do each of the following acts, namely to—

(i) make or amend an assessment,

(ii) allow or disallow in whole or in part any credit, deduction or other amount which is relevant in computing tax payable, or any part of such credit, deduction or other amount,

(iii) allocate or deny any credit, deduction, loss, abatement, relief, allowance, exemption, income or other amount, or any part thereof,

(iv) recharacterise, for tax purposes, the nature of any payment or other amount.

(c) In paragraph (b) a reference to the doing of an act includes a reference to the making of an adjustment.

(d) Where any adjustment is made or act is done to deny or withdraw a tax advantage, relief shall be afforded from any double taxation which would, or would but for this paragraph, arise by virtue of any such adjustment made or act done pursuant to this subsection.

(5) (a) For the purposes of this subsection, ‘alternative assessment’ means an assessment—

(i) not being an assessment made pursuant to subsection (4), and

(ii) the effect of which is to withdraw or deny, in whole or in part, any tax advantage.

(b) Where a Revenue officer makes or amends an assessment to withdraw or deny a tax advantage pursuant to this section, it shall be lawful for a Revenue officer to make or have made or to amend or have amended an alternative assessment.

(c) No appeal shall lie against an assessment made pursuant to this section or an alternative assessment on the grounds that a Revenue officer has made or amended an assessment pursuant to this section, or an alternative assessment, as the case may be.

(d) Where an assessment is made pursuant to this section and an alternative assessment is made, then only one such assessment shall, by agreement with the person on whom the assessment and the alternative assessment were made or by way of determination on appeal, as the case may be, become final and conclusive.

(6) Except as provided for in section 811D(4)(a)(i), this section and section 811D shall be read as enabling the doing of, and nothing in the Acts, in particular a provision stipulating a time limit, shall be read as preventing a Revenue officer from doing, each of the following, namely:

(a) making any enquiry;

(b) taking any action;

(c) making or amending an assessment;

(d) collecting or recovering any amount of tax;

at any time in connection with this section or section 811D.

(7) Where a tax advantage is withdrawn from or denied to 2 or more persons pursuant to this section, any obligation on the Revenue Commissioners to maintain secrecy or any other restriction on the disclosure of information by the Revenue Commissioners shall not apply with respect to the making of any adjustment, the performance of any other acts or the discharge of any functions authorised by this section to be made, performed or discharged by a Revenue officer or to the making of any adjustment, the performance of any other acts or the discharge of any functions (including any act or function in relation to an appeal made under Part 40) which is directly or indirectly related to the adjustment, acts or functions so authorised.

(8) A transaction shall not be a tax avoidance transaction for the purposes of this section if it was commenced on or before 23 October 2014.

Transactions to avoid liability to tax: surcharge, interest and protective notifications

811D. (1) For the purposes of this section—

‘chargeable period’ has the meaning assigned to it in Part 41A;

‘disclosable transaction’ has the meaning assigned to it in Chapter 3 of this Part but for the purposes of this section, a transaction shall not be a disclosable transaction if—

(a) the transaction was disclosable by a promoter, pursuant to Chapter 3 of this Part, and not by a person who enters into any transaction which is or forms part of a transaction which is disclosable under section 817F, 817G or 817H,

(b) by the specified return date, within the meaning of Part 41A, for a return referred to in section 817HA(3), the transaction was not assigned a transaction number, within the meaning of Chapter 3 of this Part, or the person, in whose name or on whose behalf a qualifying avoidance disclosure or a protective notification is made, was not provided with a transaction number by a promoter or marketer, within the meaning of Chapter 3 of this Part,

(c) the person in whose name or on whose behalf a qualifying avoidance disclosure or a protective notification is made provides a Revenue officer with the specified information, within the meaning of Chapter 3 of this Part, and

(d) the person in whose name or on whose behalf a qualifying avoidance disclosure or a protective notification is made, without unreasonable delay, provides a Revenue officer with any other information that the officer may reasonably require for the purposes of deciding if an application should be made to the relevant court under section 817O(3)(a);

‘protective notification’ means a notification—

(a) which is delivered in such form as may be prescribed by the Revenue Commissioners and to such office of the Revenue Commissioners as—

(i) is specified in the prescribed form, or

(ii) as may be identified, by reference to guidance in the prescribed form, as the office to which the notification concerned should be sent,

(b) which contains—

(i) full details of the transaction which is the subject of the protective notification, including any part of that transaction that has not been undertaken before the protective notification is delivered,

(ii) full reference to the provisions of the Acts that the person, by whom, or on whose behalf, the protective notification is delivered, considers to be relevant to the treatment of the transaction for tax purposes,

(iii) full details of how, in the opinion of the person, by whom, or on whose behalf, the protective notification is delivered, each provision referred to in the protective notification in accordance with subparagraph (ii), applies, or does not apply, to the transaction, and

(iv) full details of why, in the opinion of the person, by whom, or on whose behalf, the protective notification is delivered, section 811C does not apply,

(c) which includes copies of all documentation pertaining to the transaction which is the subject of the protective notification,

(d) which is received by the Revenue Commissioners on or before the relevant date, and

(e) which does not relate to a disclosable transaction,

and subsection (2) supplements this definition;

‘qualifying avoidance disclosure’ means a disclosure that a Revenue officer is satisfied is a disclosure of complete information in relation to, and full particulars of, all matters occasioning a liability to tax that gives rise to a surcharge referred to in subsection (3), made in writing to the Revenue officer and signed by or on behalf of that person and which is accompanied by—

(a) a declaration, to the best of that person’s knowledge, information and belief, made in writing, that all matters contained in the disclosure are correct and complete, and

(b) a payment of any tax due and payable in respect of any matter contained in the disclosure and the interest payable on the late payment of that tax;

‘relevant date’ in relation to a transaction means the date which is 90 days after the date on which that transaction was commenced;

‘specific anti-avoidance provision’ means a provision specified in Schedule 33.

(2) (a) Where the condition set out in paragraph (c) of the definition of ‘protective notification’ in this section cannot be complied with by reason of the fact that part of the transaction is undertaken after the relevant date, the condition shall be deemed to have been complied with if copies of the documentation pertaining to that part of the transaction are delivered to the office referred to in paragraph (a) of that definition within 30 days from their execution.

(b) Without prejudice to the generality of paragraph (a) of the definition of ‘protective notification’, the specifying, under—

(i) section 81 of the Value-Added Tax Consolidation Act 2010 ,

(ii) section 46A of the Capital Acquisitions Tax Consolidation Act 2003 ,

(iii) section 8C of the Stamp Duties Consolidation Act 1999 , or

(iv) section 959P of this Act,

of a doubt as to the application of law to, or the treatment for tax purposes of, any matter to be contained in a return shall not be regarded as being, or being equivalent to, the delivery of a protective notification in relation to a transaction for the purposes of this section.

(3) (a) Subject to subsections (4) and (5), where—

(i) a transaction has been undertaken or arranged which would, but for section 811C or a specific anti-avoidance provision, as the case may be, give rise to a tax advantage, and

(ii) a person submits any return, declaration, statement or account or makes any claim which purports to obtain the benefit of that tax advantage,

then that person shall be liable to pay an amount (in this section referred to as the ‘surcharge’) equal to 30 per cent of the amount of the tax advantage and the provisions of Chapter 3A of Part 47, as they apply to penalties, shall apply with any necessary modifications to that surcharge.

(b) Paragraph (a) shall not apply in relation to a transaction where a person has, in submitting any return, declaration, statement or account or making any claim which purports to obtain the benefit of that tax advantage, incurred a penalty under section 1077E(2) or 1077E(5), section 116 (2) or 116 (5) of the Value-Added Tax Consolidation Act 2010 , section 134A of the Stamp Duties Consolidation Act 1999 or section 58 of the Capital Acquisitions Tax Consolidation Act 2003 .

(4) (a) Where the Revenue Commissioners have received a protective notification from, or on behalf of, a person then in relation to the transaction which was the subject of the protective notification—

(i) paragraphs (a), (b) and (c) of section 811C(6) shall not apply, and

(ii) where a Revenue officer, pursuant to section 811C(4), makes or amends an assessment to withdraw or deny a tax advantage arising out of or by reason of a tax avoidance transaction—

(I) the surcharge referred to in subsection (3) shall not apply, and

(II) any tax due and payable by a person as a result of the tax advantage being withdrawn or denied shall be deemed to be due and payable not later than one month from the date of the assessment or amended assessment as appropriate.

(b) Where a notification which purports to be a protective notification has been received by the Revenue Commissioners and a Revenue officer determines that the notification is not a protective notification, because it does not comply with one or more of the requirements set out in the definition of protective notification in this section, and—

(i) commences carrying out enquiries as if section 811C(6)(a) applied, a taxpayer who is aggrieved by such enquiries, on the grounds that the person considers that the officer was precluded from making that enquiry by reason of paragraph (a)(i), may appeal to the Appeal Commissioners and subsections (5) to (8) of section 959Z shall, with any necessary modifications, apply to that appeal, or

(ii) makes or amends an assessment as if section 811C(6)(c) applied, a taxpayer who is aggrieved by the making of such an assessment, or, as the case may be, such amendment, on the grounds that the person considers that the officer was precluded from making the assessment or, as the case may be, the amendment, by reason of paragraph (a)(i), may appeal to the Appeal Commissioners and subsections (2) and (3) of section 959AF shall, with any necessary modifications, apply to that appeal.

(5) (a) Where a person makes a qualifying avoidance disclosure in relation to a transaction which is not a disclosable transaction, then—

(i) if a Revenue officer has not commenced any inquiry into the transaction and the disclosure is made within a period of 24 months from the end of the chargeable period in which the transaction was commenced, the surcharge referred to in subsection (3) shall not apply,

(ii) if a Revenue officer has not withdrawn or denied a tax advantage under section 811C or a specific anti-avoidance provision, as the case may be, the surcharge referred to in subsection (3) shall be 3 per cent,

(iii) if a Revenue officer has withdrawn or denied a tax advantage under section 811C or a specific anti-avoidance provision, as the case may be, and no appeal in relation to that withdrawal or denial has been made, the surcharge referred to in subsection (3) shall be 5 per cent,

(iv) if a person has made an appeal in relation to the withdrawal or denial of a tax advantage under section 811C or a specific anti- avoidance provision, as the case may be, and that appeal has not yet been heard by the Appeal Commissioners, the surcharge referred to in subsection (3) shall be 10 per cent,

and, if the case does not fall within any of subparagraphs (i) to (iv), then the surcharge referred to in subsection (3) shall be 30 per cent.

(b) Where a person makes a qualifying avoidance disclosure in relation to a transaction which is a disclosable transaction, then—

(i) if a Revenue officer has not commenced any inquiry into the transaction and the disclosure is made within a period of 24 months from the end of the chargeable period in which the transaction was commenced, the surcharge referred to in subsection (3) shall be 3 per cent,

(ii) if a Revenue officer has not withdrawn or denied a tax advantage under section 811C or a specific anti-avoidance provision, as the case may be, the surcharge referred to in subsection (3) shall be 6 per cent,

(iii) if a Revenue officer has withdrawn or denied a tax advantage under section 811C or a specific anti-avoidance provision, as the case may be, and no appeal in relation to that withdrawal or denial has been made, the surcharge referred to in subsection (3) shall be 10 per cent,

(iv) if a person has made an appeal in relation to the withdrawal or denial of a tax advantage under section 811C or a specific anti- avoidance provision, as the case may be, and that appeal has not yet been heard by the Appeal Commissioners, the surcharge referred to in subsection (3) shall be 20 per cent,

and, if the case does not fall within any of subparagraphs (i) to (iv), then the surcharge referred to in subsection (3) shall be 30 per cent.

(6) Where a person makes a protective notification, or a protective notification is made on a person’s behalf, then the person shall be treated as making the protective notification—

(a) solely, by virtue of the operation of subsection (4)(a)(ii), to prevent a surcharge or interest becoming payable by the person, and

(b) wholly without prejudice as to whether the transaction concerned was a tax avoidance transaction.

(7) This section shall not apply to a transaction if any part of it was commenced on or before 23 October 2014.”,

and

(d) by inserting the following after Schedule 32 to the Principal Act:

“Schedule 33

Specific Anti-Avoidance Provisions for the Purposes of Part 33

The following sections shall be specific anti-avoidance provisions for the purposes of Part 33:

”.

(2) The Principal Act is amended in the manner and to the extent specified in Schedule 1.

(3) This section shall come into effect as and from 23 October 2014.