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InDisputes: Revenue Hedging Bets with Double Assessments

AUTHORs: Tomás Bailey co-author(s): Rachel O'Sullivan Services: Tax DATE: 20/07/2023

The Tax Appeal Commission (the "TAC") recently upheld an assessment raised by Irish Revenue ("Revenue") for capital gains tax ("CGT") in respect of certain transfers of shares (the "Transaction").  Unusually, Revenue also raised a separate assessment to income tax on the same taxpayer in respect of the Transaction which was also the subject of the appeal.


The taxpayer and his wife held the entire shareholding of a building company.  The taxpayer and his wife disposed of their shareholdings both for cash consideration and in exchange for shares in a separate company owned by their son.  The taxpayer claimed relief on the Transaction.  Revenue raised two separate assessments in respect of the Transaction:

(i) an assessment to CGT in the amount of €348,112 (the "CGT Assessment") based on the denial by Revenue of reliefs claimed by the taxpayer by reference to anti-avoidance provisions[1]; and

(ii) an assessment to income tax in the amount of €678,866 (the "IT Assessment") based on the application by Revenue of a specific anti-avoidance provision designed to counteract income tax avoidance schemes.[2]

Selecting the Assessment

Although Revenue accepted that it was not entitled to recover on foot of both assessments, the taxpayer did not dispute Revenue's legal entitlement to raise alternative assessments in respect of the same transactions.  As such, the TAC did not examine the issue in any detail. 

The TAC concluded that it was entitled to decide which assessment to determine first and, to the extent that this first assessment was upheld, it would not be required to consider the other assessment. 

On the facts, the TAC considered the CGT Assessment because:

(i) on a prima facie basis, the Transaction appeared to be a capital transaction; and

(ii) the CGT Assessment was raised one day before the IT Assessment and, as such, the CGT Assessment arose first; and

As the TAC determined that the CGT Assessment should be upheld, it did not proceed to consider the IT Assessment, notwithstanding that the quantum of the IT Assessment was approximately double the quantum of the CGT Assessment.

Client Takeaway

The risk of multiple tax assessments arising concurrently in respect of the same transaction will be a concern to taxpayers subject to Revenue audits and investigations.  Multiple assessments will increase the demand on taxpayer resources throughout the tax appeal process, requiring taxpayers to prove their case under multiple tax-heads.  As such, taxpayers should seek to carefully manage the scope of any potential dispute from the outset of engagements with Revenue.

[1] The taxpayer relied on Retirement Relief (section 598 TCA) and Share-for-Share Relief (section 586 TCA) in respect of the Transaction.

[2] The relevant provision was section 817 TCA.