Businessmen dispute Revenue's claim they owe €6.2m for tax bills
Published 28/02/2012 | 05:00
FOUR businessmen say tax bills of up to €6.2m should not stand because they involved financial transactions that fell within anti-avoidance provisions of revenue legislation.
It is claimed the disputed tax decisions of 2011 arose from pre-determined views within the Revenue that the four were engaged in tax avoidance via arrangements to create and use contrived capital losses.
One such scheme was allegedly used to generate artificial capital losses of €409m in an attempt to shelter capital gains tax of over €85m, it is claimed.
The four, including two company directors, are challenging the manner in which a Revenue officer in 2011 formed the opinion that their transactions were tax-avoidance transactions for the purpose of Section 811 of the Taxes Consolidation Act, with the effect that tax advantage should be withdrawn and claims for capital gains losses should be disallowed.
As a result of information received after Freedom of Information requests, they allege the Revenue had identified and grouped together about 26 cases in which identical or very similar arrangements were concluded with London-based global assets management company, referred to as the "Schroders Ready Made 26".
It is alleged the transactions that the Revenue sought to impugn fell within the Schroders Ready Made 26.
Four sets of separate proceedings challenging the Revenue opinions were transferred to the Commercial Court yesterday by Mr Justice Peter Kelly, who was told a test case would be selected from among the four to address the issues raised.
Michael Collins SC, for the applicants, said they wanted to know exactly when the Revenue officer formed the disputed opinions about the scheme.
One of the challenges is by Ronan McNamee, a businessman, of Atherstone, Temple Road, Dartry, Co Dublin, over two financial transactions entered into by himself and his wife in about September 2007. The transactions involved financial "straddles", one involving government gilts and the other foreign currency.
Mr McNamee claims he and his wife made a profit from the gilts' sale, which was exempt from tax, and a loss on the foreign currency transaction. He claims he deducted this loss when compiling chargeable gains for his 2007 tax return.
In a notice of opinion of August 2011, a Revenue-nominated officer issued a notice that the transaction was a tax-avoidance transaction and a total tax advantage, including a surcharge, of €6.2m was to be withdrawn from Mr McNamee.
A similar challenge has been brought by Derek Whelan, a company director, of Foxrock Manor, Foxrock, Dublin 18, concerning straddle transactions. A third challenge is by company director John Punch, of The Park, Cobh, Co Cork, over straddle transactions between May to September 2009.
Martin Punch, a company director, of The Fountain, Glanmire, Co Cork, has challenged a similar opinion related to a similar straddle transaction of May to September 2009.