1079 Duties of relevant person in relation to certain revenue offences

Summary

This section provides that all auditors and tax advisers who become aware in the course of their normal work of material tax evasion or non-compliance committed by a client company must report this to the company and request that the matter be rectified or that the company should report the offence to Revenue. It further provides that if, at the end of 6 months, it is not established to the satisfaction of the auditor or adviser that the matter has been so rectified or reported, the auditor or adviser must cease to act as auditor, or cease to assist or advise the company in tax matters, for a period of either 3 years from the date of the (auditor/adviser’s) report to the company or until the auditor or adviser is satisfied that the matter had been rectified or reported, whichever is the earlier. Any resignation under this section must also be reported to Revenue. Nothing in the section is to prevent a person assisting or advising a company in preparing for or conducting legal proceedings, either civil or criminal, which are extant or pending at the end of the 6 month period in question. The list of reportable offences all relate to serious tax evasion. The question of whether there is material tax evasion is a matter for the auditor or adviser in any particular case to assess taking account of his/her own professional standards and the requirements of the section.

Details

Definitions

(1) “the Acts” are defined in a list of statutes and instruments which cover the taxes and duties under the care and management of the Revenue Commissioners. The offences detailed in the section apply in relation to matters required to be done by the Acts or to actions undertaken in relation to tax. The Acts concerned are —

• the Customs Acts,
• the statutes relating to excise duties and the management of those duties,
• the Tax Acts,
• Parts 18A, 18B, 18C and 18D,
• the Capital Gains Tax Acts,
• the Value-Added Tax Consolidation Act 2010 and any amendments or extensions to that Act,
• the Capital Acquisitions Tax Consolidation Act 2003 and any amendments or extensions to that Act,
• the statutes relating to stamp duty and the management of that duty, and
• the Finance (Local Property Tax) Act 2012.

(1) & (12) “appropriate officer” is an officer of the Revenue Commissioners nominated by them to whom notification of tax offences and resignations is to be delivered. The name of such officer and the address to which copies of notices under the section are to be delivered must be published in Iris Oifigiúil.

“company” is any body corporate. The provision applies to companies whether public or private, limited or unlimited, and to co-operatives and friendly societies, but not to individuals (that is, sole traders or partners in a partnership who are taxed on an individual basis).

“relevant person” is —

• an auditor to a company appointed under the Companies Acts,
• a “public” auditor to an industrial or provident society or a friendly society, and
• any person who with a view to reward, assists or advises a company in the preparation or delivery of any information, declaration, return, records, accounts or other document which he/she knows will be, or is likely to be, used for any purpose of tax.

(1) & (2) A person who assists or advises the company solely in the capacity as an employee of the company is not a “relevant person” for the purposes of the section provided the income for so assisting or advising is comprised solely of income taxed under the PAYE system.

“relevant offence” defines the tax offences covered by the section. These are offences which consist of a company —

• knowingly or wilfully delivering, furnishing or causing to be furnished any incorrect return, statement, accounts or information in connection with any tax covered by this section (for example, an incorrect return of income for corporation tax purposes or false accounts of a business or any supporting statement or information which is incorrect),
• knowingly or wilfully claiming or obtaining relief or exemption from, or repayment of, any tax, being a relief, exemption or repayment to which there is no entitlement (an example would be the deliberate making of false claims),
• knowingly or wilfully issuing or producing any incorrect invoice, receipt, instrument or document in connection with any tax,
• knowingly or wilfully failing to comply with any provision of the Acts requiring the furnishing of a return of income, profits or gains, or of sources of income, profits or gains for the purpose of any tax (in this instance an offence is not to be regarded as committed by a company if it has made a return of income, profits or gains to Revenue in respect of an accounting period which falls wholly or partly into the period of 3 years immediately preceding the accounting period in respect of which the offence was committed).

“tax” is any tax, duty, levy or charge under the care and management of the Revenue Commissioners.

Duties of relevant persons

(3) A relevant person is obliged to take certain steps where he/she becomes aware in the course of examining the accounts of a company or assisting or advising the company in the preparation or delivery of any information, declaration, return, records, accounts or other document for the purposes of tax that the company has committed (or is in the course of committing) a relevant offence and the offence is of a material nature. The steps required to be taken by a relevant person are —

• he/she must communicate particulars of the offence in writing to the company without delay and request that, within 6 months of communicating with the company, the matter be rectified or that the company should notify an appropriate officer (of the Revenue Commissioners) of the offence, and
• he/she must cease to act, assist or advise as a relevant person unless it can be established that such rectification or notification has taken place.

Where a relevant person ceases to act, assist or advise the company under the section he/she must not so act, assist or advise for a period of 3 years from when particulars of the offence or offences were communicated to the company, or until rectification or notification has taken place, whichever is the earlier.

(4) An exception to the latter obligation to cease to act, assist or advise as a relevant person arises where a relevant person is advising or assisting a company in preparing for, or conducting, legal proceedings which are extant or pending 6 months after the time of communication to the company.

(5) Where an auditor ceases to act for the company he/she must deliver a notice in writing to the company stating that he/she is ceasing to act and, within 14 days after that delivery, deliver a copy of the notice to an appropriate officer.

Offences under this section

(6) A person is guilty of an offence under this section if he/she fails to comply with the requirements of subsection (3) or (5) or knowingly or wilfully makes an incorrect communication under subsection (3).

Penalties

(7) The penalties to which a relevant person is subject if convicted of an offence under this section are —

• on summary conviction, a fine of €1,265 which may be mitigated to not less than one-fourth part of such fine, or
• on conviction on indictment, a fine not exceeding €6,345 or, at the discretion of the court, imprisonment for a term not exceeding 2 years, or to both the fine and imprisonment.

(8) Under section 13 of the Criminal Procedure Act, 1967, which is adopted and adapted for the purposes of this section, there is a procedure whereby a person who pleads guilty in the District Court to an indictable offence will only be penalised to the extent of a maximum fine and prison sentence of €125 and 12 months respectively. However, where that procedure is followed in the case of an offence under this section, the maximum penalty will be €1,265 rather than the amount set out in section 13 of the Criminal Procedure Act, 1967.

(9) A time limit of 6 years from the date on which a relevant person is required under this section to communicate particulars of an offence in writing to a company applies to proceedings for offences under this section. This time limit overrules any provision to the contrary.

Legal/professional privilege

(10) A relevant person who is accused of an offence under subsection (6)(a) has a good defence if it can be shown that he/she only became aware that a reportable offence had been committed by a company after they had been engaged by the company to assist in the preparation for litigation. The effect of this provision is to remove from the requirements of the section all legal advisers, barristers, solicitors or other professional advisers who have been engaged solely to assist in the preparation for litigation, thus preserving the established principle in Irish law of legal/professional privilege.

Protection for relevant persons

(11) Where a relevant person has obligations under subsections (3) and (5) and complies with those obligations in the course of that person’s professional duty then, no liability or action can be taken against them in any court for so doing.

Commencement

(13) The section applies as respects a relevant offence committed by a company in respect of tax which is —

• assessable by reference to accounting periods, for any accounting period beginning after the 30th June, 1995,
• assessable by reference to years of assessment, for the year of assessment 1995–96 and subsequent years,
• payable by reference to a taxable period, for a taxable period beginning after the 30th June, 1995,
• chargeable on gifts or inheritance taken on or after the 30th June, 1995,
• chargeable on instruments executed on or after the 30th June, 1995, or
• payable in any other case, on or after the 30th June, 1995.

Relevant Date: Finance Act 2019