The Irish Revenue Commissioners have recently published updated guidance in which they explicitly refuse to accept the reasoning of a Tax Appeals Commission determination that found in favour of the taxpayer.
Background
The Irish Revenue Commissioners (“Irish Revenue”) updated their Tax and Duty Manual “Part 5: Section 31D - Cancellation schemes of arrangement” in May 2023 to make reference to a recent appeal heard by the Tax Appeals Commission (“TAC”) in relation to section 31D of the Stamp Duties Consolidation Act. Broadly, the appeal related to whether the cancellation of shares pursuant to a court approved scheme of arrangement was within the charge to Irish stamp duty. The judgment in this appeal found in favour of the taxpayer, stating that the imposition of a stamp duty charge in relation to the schemes of arrangement was contrary to the EU Capital Duties Directive.
Irish Revenue have updated the Tax and Duty Manual to specifically refer to this case and TAC’s determination. Somewhat unusually, Irish Revenue have refused to accept TAC’s reasoning. In the updated guidance, Irish Revenue state that:
Revenue has not changed its interpretation of section 31D in light of the TAC determination. Revenue is of the view that section 31D, which is an important anti-avoidance provision, is not in contravention of the Capital Duties Directive.
The fact that Irish Revenue have adopted this view on section 31D is not surprising given the purpose for which the section was introduced.
Precedential value of TAC decisions
In addition to their refusal to change their interpretation of the relevant section, Irish Revenue made the following observation:
… it is noted that a determination of the TAC is specific to the assessment or decision that is the subject of the appeal; it does not create a precedent in relation to the operation of tax law.
Irish Revenue are correct in their statements regarding the precedential value of TAC determinations as regards the Irish courts system. However, it is important to note that TAC may have regard to its own previous determinations when determining new appeals raising common or related issues – this is provided for in section 949AN of the Taxes Consolidation Act.
Point to note for taxpayers
It is noteworthy that taxpayers are likewise not bound by TAC determinations and are entitled to adopt different filing positions. This may happen in practice where there are differences in facts or points of law which are left unresolved and are not referred to the Irish High Court for resolution.
Of course, Irish Revenue are likely to assert that TAC judgments against taxpayers are correct and are likely to conduct audit activity on that basis – so taxpayers should be prepared to litigate in cases where filings are made contrary to published TAC determinations.