The Tax Appeal Commission (the "TAC") recently upheld an assessment by Irish Revenue to deny a taxpayer corporation tax relief for failing to include details of the relief in the correct line of the relevant tax return. The fact that the taxpayer satisfied the substantive conditions for the relief, filed the tax return with details of the claim within the prescribed time period, and included details of all relevant amounts involved in the return was not enough to save the claim.
The taxpayer incurred expenditure on intellectual property which qualified for amortisation relief (the "Relief") and filed a corporation tax return (the "Return") with the relevant details included within the prescribed 12 month time limit for claiming the Relief. However, the taxpayer included details of its claim in the line of the Return titled "Other capital allowances (including patent rights) and relief for know-how under Sec. 768 TCA 1997)" and not in the line titled "Machinery and plant (including motor vehicles and specified intangible assets)." Technically, the Relief related to 'specified intangible assets'.
While the parties agreed that the Return was the correct form for making a claim for the Relief, they disagreed on whether the relevant information needed to be included in the specific line of the Return to constitute a valid claim. While the taxpayer argued that it was sufficient that it had included details of the claim within the Return and that the taxable profits for the period were therefore accurate, Irish Revenue asserted that the taxpayer's failure to include the details in the appropriate line meant that the taxpayer had failed to claim the Relief.
The TAC accepted that a claim for the Relief must be made in the prescribed form (being the form prescribed by Irish Revenue) and that the Return was the prescribed form in this context.
However, the TAC dismissed the taxpayer's argument that the inclusion of relevant details in the prescribed form generally satisfies the requirement to claim the Relief. The TAC highlighted that the prescribed form for claiming the Relief was not just the Return in a general sense, but rather the specific section of the Return which referred to 'specified intangible assets'. The taxpayer's failure to include the relevant details in this section was fatal to the claim.
In reaching the conclusion that the claim needed to be included in the specific line of the Return to be valid, the TAC noted that the specific references to 'specified intangible assets' made it clear where claims for the Relief should be included.
Advice for Clients
The denial of the Relief in this case is consistent with the result in some other cases where the taxpayers' claims for tax relief or repayment have been completely denied in circumstances where Irish Revenue strictly assert a failure to satisfy certain administrative requirements.
It is crucial that, in addition to satisfying the substantive requirements for tax relief or repayment,taxpayers closely scrutinise the relevant claim forms and documents to ensure full and accurate compliance with all requirements. Failing to do so could result in significant penalisation for an administrative error.