865B No offset where repayment prohibited

Summary

Subject to one exception, this section confirms that, where a repayment of tax cannot be made to a person because a claim is lodged outside of the relevant time limit, offset against any other tax liabilities of the person is prohibited. This rule applies across all the direct taxes (and related charges and levies), stamp duty, gift tax, inheritance tax, excise duties, value-added tax and local property tax and applies regardless of when the tax is or was paid. The section also confirms that there is no right of offset outside of that provided for under the various tax codes.

The exception referred to above is outlined in the detailed notes below.

Details

Definitions

(1) The definition of “Acts” covers statutes relating to excise; the Tax Acts; the Capital Gains Tax Acts; Parts 18A, 18C and 18D; the Capital Acquisitions Tax Consolidation Act 2003 as amended or extended; the Stamp Duties Consolidation Act 1999 as amended or extended; the VAT Consolidation Act 2010 as amended or extended; the Finance (Local Property Tax) Act 2012 and any instruments made under any of those statutes or enactments.

“relevant period” is defined in relation to a repayment and is, in general, the accounting period or tax year to which the repayment relates or in which a relevant date, act, event or taxable period, which gives rise to the repayment, falls.

“repayment” includes a refund.

“tax” is defined widely to include the various taxes, duties, levies and charges (as covered by the definition of Acts) and includes any interest, surcharge or penalty relating to the tax, duty, levy or charge. Also included is any sum relating to a withdrawal of a relief or an exemption and sums required to be withheld and remitted to Revenue. Finally, amounts paid on account of tax (e.g. including payment in excess of liability) are included.

“taxable period” has the same meaning as in section 2 of the VAT Consolidation Act 2010.

No offset where repayment denied due to time limit

(2) Subject to the exception outlined below, where a repayment of tax cannot be made to a person because a claim is lodged outside of the relevant time limit, offset against any other tax liabilities of the person is prohibited. This provision applies to repayments that are prohibited by virtue of any time limit contained in:

• section 865,
• section 105B of the Finance Act 2001,
• section 99 of the VAT Consolidation Act 2010,
• section 159A of the Stamp Duties Consolidation Act 1999,
• section 57 of the Capital Acquisitions Tax Consolidation Act 2003, or
• any other provision of any of the Acts.

Exception to general rule

There is one exception to the general rule (outlined above) on the prohibition of offsets.

(3)& (4) The exception applies where tax is due and payable for a tax year or accounting period by virtue of action taken by Revenue, to assess or recover the tax, at a time that is 4 years or more after the end of the year or period involved. In such a case, an amount of tax which cannot be repaid because of the application of a time limit, but which relates to the same tax year or accounting period as the tax liability Revenue is pursuing, is available for offset. This is subject to the condition that the amount available for offset cannot exceed the amount of tax that becomes due and payable for the relevant tax year or accounting period as a result of the assessing or recovery action so taken by Revenue.

No offset except as provided by the Acts

(5) The section also provides that there is no right of offset except as provided under the Acts relating to the various taxes, duties, levies and charges.

Relevant Date: Finance Act 2019