Qualifying Avoidance Disclosures under Section 811A(2A) Taxes Consolidation Act 1997

Section 87(1)(b)(i) of the Finance Act 2014 allows a taxpayer, who entered into a tax avoidance transaction on or before 23 October 2014, to settle with Revenue by paying the tax or duty due and payable and a reduced amount of interest.

To avail of this opportunity, a taxpayer must make a "qualifying avoidance disclosure" in writing to the Revenue Commissioners on or before 30 June 2015.

Why make a "qualifying avoidance disclosure"?

Where a taxpayer makes a "qualifying avoidance disclosure" the legislation provides as follows:

• a 20% reduction in the interest that would otherwise be payable, and
• the 10% or 20 % surcharge will not apply under section 811A TCA 1997.

It should be noted that Revenue’s policy is to actively challenge tax avoidance transactions and to litigate such cases in the Courts where Revenue is of the view that a tax avoidance transaction is not effective under tax legislation in achieving the intended tax advantage.

It should be noted that the opportunity afforded by section 87(1)(b)(i) is strictly time-bound. After 30 June 2015, the existing policy in relation to challenging pre-24 October 2014 tax avoidance transactions will apply.

How to make a "qualifying avoidance disclosure"

A qualifying avoidance disclosure must be made in writing to Revenue on or before 30 June 2015.

The disclosure must:

• provide complete information about, and full particulars of, the tax avoidance transaction;
• contain a declaration that, to the best of the taxpayer’s knowledge, information and belief, the disclosure is correct and complete;
• be accompanied by payment of all the tax due;
• be accompanied by payment of 80% of any interest due; and
• be signed by or on behalf of the taxpayer.

Disclosures should be made using a Form QAD1 or Form QAD2 (continuation sheet) and submitted to:

Qualifying Avoidance Disclosure Unit,

Large Cases Division,

Ballaugh House,

73-79 Mount Street,

Dublin 2.

The forms are now available below:

Form QAD1 - Qualifying Avoidance Disclosure

Form QAD2 - Qualifying Avoidance Disclosure

What Qualifies?

The settlement opportunity is available in relation to tax avoidance transactions commenced on or before 23 October 2014. The types of transactions that qualify are:

1. Tax avoidance transactions within the meaning of section 811 of the TCA 1997 (“section 811”), that is, transactions where a nominated officer of the Revenue Commissioners has formed an opinion under that section.
2. Transactions that, had the Revenue Commissioners formed an opinion under section 811, would have led to a liability to tax under that section.
   
   It may not be immediately obvious to a taxpayer, who has engaged in a tax avoidance transaction and who has not received a notice of opinion under section 811, whether or not a qualifying avoidance disclosure may be made in relation to that transaction. Refer to Appendix 1 on pages 3 and 4 of the Tax Avoidance Settlement Incentive Manual [Part 33-02-04] for further guidance on this point.
3. VAT avoidance transactions that are being challenged or could be challenged by Revenue under the "Abuse of Rights" principle.

Calculating the tax and interest due

The taxpayer, or the taxpayer’s agent, should calculate the tax liability associated with a tax avoidance transaction. The tax liability due must be paid at the same time as the qualifying avoidance disclosure is made.

Interest on the tax liability should be calculated from the day the tax would have been due had the tax avoidance transaction not taken place. The interest so calculated is capped at 80%.

Taxpayers should note that a penalty will not apply if Revenue accepts that a disclosure is a qualifying avoidance disclosure that relates to a tax avoidance transaction.

30 January 2015