Irish Revenue Launches New Anti-Avoidance Website
The Irish Revenue has launched a new webpage that contains guidance on what it considers to be tax avoidance and information on the legislative tools available to detect and tackle avoidance arrangements.
Revenue said its policy is “to challenge tax avoidance schemes and [the] unintended use of the legislation which threatens tax yields and the fairness of the tax system.” It added that it encourages taxpayers to review their tax and duty affairs regularly and to quantify and report any irregularities.
The information on its webpage relates to tax avoidance transactions that began after October 23, 2014.
According to Revenue, tax avoidance “can be described as using tax reliefs and allowances in a way in which they were not intended to be used or seeking to re-label and re-characterize a transaction undertaken primarily to seek to claim a tax advantage and not primarily for business reasons.” The webpage contains a number of questions taxpayers can answer when attempting to determine whether they are engaging in tax avoidance.
Revenue added that it will examine any scheme to determine whether it complies with the applicable tax legislation outside of the General Anti-Avoidance Rule (GAAR). If a scheme is successfully challenged, a user may be subject to interest and a penalty ranging from three to 100 percent. If a scheme is caught by the GAAR and successfully challenged by Revenue, the user may be liable to interest and a penalty or a 30 percent tax avoidance surcharge.
The promoter of a tax avoidance scheme may be legally required to file a mandatory disclosure, outlining the details of a transaction and of any clients entering into the transaction. Revenue will issue the promoter with a Transaction Number, which any taxpayer who seeks to obtain a tax benefit from the transaction must put on their tax return. Revenue said that this should not be regarded as its having approved a transaction and is “merely part of the process whereby the promoter is complying with their obligations under the mandatory disclosure regime.”
Separately, the promoter or a tax adviser may file a protective notification or an expression of doubt in relation to a transaction. This brings to Revenue’s attention a transaction that a taxpayer has undertaken where the taxpayer is of the view that they have not entered into a tax avoidance transaction but wishes to mitigate the consequences of Revenue assessing that they have in fact done so. This notification will prevent a tax avoidance surcharge from arising and will delay the interest accruing if the transaction is successfully challenged by Revenue.
