1077EPenalty for deliberately or carelessly making incorrect returns, etc.

(1) In this section—

“the Acts” means the Tax Acts, the Capital Gains Tax Acts and ^[3]>Parts 18A and 18B^<[3][3]>Parts 18A, 18B, 18C and 18D^<[3] of this Act;

“the Acts” means the Tax Acts, the Capital Gains Tax Acts, Parts 18A, 18B, 18C, 18D of this Act and the Finance (Local Property Tax) Act 2012;

“carelessly” means failure to take reasonable care;

“liability to tax” means a liability to the amount of the difference specified in subsection (11) or (12) arising from any matter referred to in subsection (2), (3), (5) or (6);

“period” means a year of assessment or accounting period ^[2]>or a return period, as defined in section 530^<[2], as the context requires;

“prompted qualifying disclosure”, in relation to a person, means a qualifying disclosure that has been made to the Revenue Commissioners or to a Revenue officer in the period between—

(a) the date on which the person is notified by a Revenue officer of the date on which an investigation or inquiry into any matter occasioning a liability to tax of that person will start, and

(b) the date that the investigation or inquiry starts;

“qualifying disclosure”, in relation to a person, means—

(a) in relation to a penalty referred to in subsection (4), a disclosure that the Revenue Commissioners are satisfied is a disclosure of complete information in relation to, and full particulars of, all matters occasioning a liability to tax that gives rise to a penalty referred to in subsection (4), and full particulars of all matters occasioning any liability to tax or duty that gives rise to a penalty referred to in section 116(4) of the Value-Added Tax Consolidation Act 2010, section 134A(2) of the Stamp Duties Consolidation Act 1999 and the application of subsection (4) to the Capital Acquisitions Tax Consolidation Act 2003, and

(b) in relation to a penalty referred to in subsection (7), a disclosure that the Revenue Commissioners are satisfied is a disclosure of complete information in relation to, and full particulars of, all matters occasioning a liability to tax that gives rise to a penalty referred to in subsection (7) for the relevant period under whichever of the Acts the disclosure relates to,

made in writing to the Revenue Commissioners or to a Revenue officer and signed by or on behalf of that person and that is accompanied by—

(i) a declaration, to the best of that person’s knowledge, information and belief, made in writing that all matters contained in the disclosure are correct and complete, and

(ii) a payment of either or both of the tax and duty payable in respect of any matter contained in the disclosure and the interest on late payment of that tax and duty.

“Revenue officer” means an officer of the Revenue Commissioners;

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“tax” means income tax, corporation tax, capital gains tax, income levy or parking levy;

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“tax” means any income tax, corporation tax, capital gains tax, ^[8]>domicile levy,^<[8] income levy, parking levy^[7]>, universal social charge^<[7] or local property tax;

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“unprompted qualifying disclosure”, in relation to a person, means a qualifying disclosure that the Revenue Commissioners are satisfied has been voluntarily furnished to them—

(a) before an investigation or inquiry had been started by them or by a Revenue officer into any matter occasioning a liability to tax of that person, or

(b) where the person is notified by a Revenue officer of the date on which an investigation or inquiry into any matter occasioning a liability to tax of that person will start, before that notification.

(2) Where any person—

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(a) delivers any incorrect return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29 which contains a deliberate understatement of income, profits or gains or a deliberately false or overstated claim in connection with any allowance, deduction, relief or credit,

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(a) delivers any incorrect return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29 where that return or statement contains——

(i) a deliberate understatement of——

(I)income, profits or gains, or

(II)income tax in respect of emoluments to which Chapter 4 of Part 42 relates,

or

(ii) a deliberately false or overstated claim in connection with any allowance, deduction, relief or credit,

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(b) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction, relief or credit and does so deliberately, or

(c) submits to the Revenue Commissioners, the Appeal Commissioners or a Revenue officer any incorrect accounts which contain a deliberate understatement of income, profits or gains or a deliberate overstatement of any claim in connection with any allowance, deduction, relief or credit,

that person shall be liable to a penalty.

(3) Where any person deliberately fails to comply with a requirement to deliver a return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29, that person shall be liable to a penalty.

(4) The penalty referred to—

(a) in subsection (2), shall be the amount specified in subsection (11), and

(b) in subsection (3), shall be the amount specified in subsection (12),

reduced, where the person liable to the penalty cooperated fully with any investigation or inquiry started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, to—

(i) 75 per cent of that amount where subparagraph (ii) or (iii) does not apply,

(ii) 50 per cent of that amount where a prompted qualifying disclosure is made by that person, or

(iii) 10 per cent of that amount where an unprompted qualifying disclosure is made by that person.

(5) Where any person carelessly but not deliberately—

(a) delivers any incorrect return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29,

(b) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction, relief or credit, or

(c) submits to the Revenue Commissioners, the Appeal Commissioners or a Revenue officer any incorrect accounts which contain an understatement of income, profits or gains or an overstatement of any claims in connection with any allowance, deduction, relief or credit,

that person shall be liable to a penalty.

(6) Where any person carelessly but not deliberately fails to comply with a requirement to deliver a return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29, that person shall be liable to a penalty.

(7) (a) The penalty referred to—

(i) in subsection (5) shall be the amount specified in subsection (11), and

(ii) in subsection (6) shall be the amount specified in subsection (12),

reduced to 40 per cent in cases where the excess referred to in subparagraph (I) of paragraph (b) applies and to 20 per cent in other cases.

(b) Where a person liable to a penalty cooperated fully with any investigation or inquiry started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, the penalty referred to—

(i) in subsection (5), shall be the amount specified in subsection (11), and

(ii) in subsection (6), shall be the amount specified in subsection (12), reduced—

(I) where the difference referred to in subsection (11) or subsection (12), as the case may be, exceeds 15 per cent of the amount referred to in paragraph (b) of subsection (11) or paragraph (b) of subsection (12), to—

(A) 30 per cent of the difference referred to in subsection (11) or, as the case may be, subsection (12) (in clauses (B) and (C) referred to as “that amount”) where clause (B) or (C) does not apply,

(B) 20 per cent of that amount where a prompted qualifying disclosure is made by that person, or

(C) 5 per cent of that amount where an unprompted qualifying disclosure is made by that person,

or

(II) where the difference referred to in subsection (11) or subsection (12), as the case may be, does not exceed 15 per cent of the amount referred to in paragraph (b) of subsection (11) or paragraph (b) of subsection (12) to—

(A) 15 per cent of the difference referred to in subsection (11) or, as the case may be, subsection (12) (in clauses (B) and (C) referred to as “that amount”) where clause (B) or (C) does not apply,

(B) 10 per cent of that amount where a prompted qualifying disclosure is made by that person, or

(C) 3 per cent of that amount where an unprompted qualifying disclosure is made by that person.

(8) Where any person deliberately or carelessly furnishes, gives, produces or makes any incorrect return, information, certificate, document, record, statement, particulars, account or declaration of a kind mentioned in any of the provisions specified in column 2 or 3 of Schedule 29, that person shall be liable to—

(a) a penalty of €3,000 where that person has acted carelessly, or

(b) a penalty of €5,000 where that person has acted deliberately.

(9) Where any return, statement, declaration or accounts mentioned in subsection (2) or (5) was or were made or submitted by a person, neither deliberately nor carelessly, and it comes to that person’s notice that it was or they were incorrect, then, unless the error is remedied without unreasonable delay, the incorrect return, statement, declaration or accounts shall be treated for the purposes of this section as having been deliberately made or submitted by that person.

(10) Subject to section 1077D(2), proceedings or applications for the recovery of any penalty under this section shall not be out of time because they are commenced after the time allowed by section 1063.

(11) The amount referred to in paragraph (a) of subsection (4) and in paragraph (a)(i) of subsection (7) shall be the difference between—

(a) the amount of tax that would have been payable for the relevant periods ^[9]>or could have been claimed^<[9] by the person concerned (including any amount deducted at source and not repayable) if that tax had been computed in accordance with the incorrect or false return, statement, declaration^[10]>, claim^<[10] or accounts as actually made or submitted by or on behalf of that person for those periods, and

(b) the amount of tax that would have been payable for the relevant periods by^[11]>, or refundable to,^<[11] the person concerned (including any amount deducted at source and not repayable) if that tax had been computed in accordance with the true and correct return, statement, declaration^[12]>, claim^<[12] or accounts that should have been made or submitted by or on behalf of that person for those periods,

and for the purposes of this subsection and of subsection (12) references in those subsections to tax payable shall be construed without regard to the definition of “income tax payable” in section 3.

(12) The amount referred to in paragraph (b) of subsection (4) and in ^[4]>paragraph (b)(ii)^<[4][4]>paragraph (a)(ii)^<[4] of subsection (7) shall be the difference between—

(a) the amount of tax paid by that person for the relevant periods before the start by the Revenue Commissioners or by any Revenue officer of any inquiry or investigation where the Revenue Commissioners had announced publicly that they had started an inquiry or investigation or where the Revenue Commissioners have, or a Revenue officer has, carried out an inquiry or investigation into any matter that would have been included in the return or statement if the return or statement had been delivered by that person and the return or statement had been correct, and

(b) the amount of tax which would have been payable for the relevant periods if the return or statement had been delivered by that person and the return or statement had been correct.

(13) Where a second qualifying disclosure is made by a person within 5 years of such person’s first qualifying disclosure, then as regards matters pertaining to that second disclosure—

(a) in relation to subsection (4)—

(i) paragraph (ii) shall apply as if “75 per cent” were substituted for “50 per cent”,

(ii) paragraph (iii) shall apply as if “55 per cent” were substituted for “10 per cent”, and

(b) in relation to subparagraph (I) of subsection (7)(b)—

(i) clause (B) shall apply as if “30 per cent” were substituted for “20 per cent”, and

(ii) clause (C) shall apply as if “20 per cent” were substituted for “5 per cent”.

(14) Where a third or subsequent qualifying disclosure is made by a person within 5 years of such person’s second qualifying disclosure, then as regards matters pertaining to that third or subsequent disclosure, as the case may be—

(a) the penalty referred to in paragraphs (a) and (b) of subsection (4) shall not be reduced, and

(b) the reduction referred to in subparagraph (I) of subsection (7)(b) shall not apply.

(15) A disclosure in relation to a person shall not be a qualifying disclosure where—

(a) before the disclosure is made, a Revenue officer had started an inquiry or investigation into any matter contained in that disclosure and had contacted or notified that person, or a person representing that person, in this regard, or

(b) matters contained in the disclosure are matters—

(i) that have become known, or are about to become known, to the Revenue Commissioners through their own investigations or through an investigation conducted by a statutory body or agency,

(ii) that are within the scope of an inquiry being carried out wholly or partly in public, or

(iii) to which the person who made the disclosure is linked, or about to be linked, publicly.

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(15A)(a) In this subsection—

“Directive” means Council Directive 2011/16/EU¹ on administrative cooperation in the field of taxation as amended by Council Directive 2014/107/EU of 9 December 2014² as regards mandatory automatic exchange of information in the field of taxation;

“liability to tax or duty” means, as the case may be, a liability to tax (within the meaning of subsection (1) of this section and that subsection as applied to the Capital Acquisitions Tax Consolidation Act 2003 by section 58(9)(b) of that Act), a liability to tax within the meaning of section 116(1) of the Value-Added Tax Consolidation Act 2010 or a liability to duty within the meaning of section 134A(1) of the Stamp Duties Consolidation Act 1999;

“offshore matters” means any one or more of the following—

(i)a relevant account held or situated,

(ii)relevant income or gains arising from a source or accruing, as the case may be,

(iii)relevant property situated, or

(iv)any income, gains, accounts or assets, other than those referred to in paragraphs (i) to (iii), arising from a source, accruing, held or situated, as the case may be,

in a country or territory other than the State;

“penalty”, in relation to a person, means, as the case may be, any penalty of the kind referred to in subsections (2), (3), (5) and (6) of this section, those subsections as applied to the Capital Acquisitions Tax Consolidation Act 2003 by section 58(9)(b) of that Act, any penalty of the kind referred to in subsections (2), (3), (5) and (6) of section 116 of the Value-Added Tax Consolidation Act 2010 or any further penalty of the kind referred to in subsections (2) and (4) of section 134A of the Stamp Duties Consolidation Act 1999;

“relevant account” means an account reportable under the standard or, as the case may be, under the Directive, or an account of a kind reportable under the standard or, as the case may be, under the Directive;

“relevant income or gains” means income or gains reportable under the standard or, as the case may be, under the Directive, or income or gains of a kind reportable under the standard or, as the case may be, under the Directive;

“relevant property” means property reportable under the Directive, or property of a kind reportable under the Directive;

“specified penalty”, in relation to a person, means, as the case may be, a penalty or further penalty of the kind referred to—

(i)in subsections (5) and (6) of this section, the amount of which does not exceed the amount referred to in subsection (7)(b)(II) (A) of this section,

(ii)in the subsections referred to in paragraph (i), as applied to the Capital Acquisitions Tax Consolidation Act 2003 by section 58(9)(b) of that Act,

(iii)in subsections (5) and (6) of section 116 of the Value-Added Tax Consolidation Act 2010, the amount of which does not exceed the amount referred to in subsection (7)(b)(II)(A) of that section, and

(iv)in subsection (4) of section 134A of the Stamp Duties Consolidation Act 1999, the amount of which does not exceed the amount referred to in subsection (5)(b)(II)(A) of that section;

“the standard” has the same meaning as in section 891F(2).

(b) A disclosure in relation to a person made on or after 1 May 2017 shall not be a qualifying disclosure where—

(i)any matters contained in the disclosure relate directly or indirectly to offshore matters, and

(ii)in any other case, the person, before the date the disclosure is made, has offshore matters occasioning a liability to tax or duty that are known or become known at any time to the Revenue Commissioners or any of their officers and the person is liable to a penalty other than a specified penalty in relation to those matters.

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(16) The relevant period for the purposes of subsections (11) and (12) shall be, in relation to anything delivered, made or submitted in any period, that period, the next period and any preceding period, and the references in those subsections to the amount of tax payable shall not, in relation to anything done in connection with a partnership, include any tax not chargeable in the partnership name.

(17) For the purposes of this section, any returns or accounts submitted on behalf of a person shall be deemed to have been submitted by the person unless that person proves that they were submitted without that person’s consent or knowledge.