Returns by Intermediaries

Returns to be made by Intermediaries in relation to certain Offshore Products

Section 896 TCA 1997 as inserted by Section 232 Finance Act 2001, requires any person who acts as an intermediary in relation to the acquisition by another person of an interest in an offshore fund or foreign life assurance policy to make a return to the Inspector of Taxes.

Previously three separate returns were required:

• Form 19 - Return of Third Party Information by certain intermediaries in relation to UCITS under Section 893 TCA 1997
• Form 8D - Return of Third Party Information by intermediaries in relation to material interests in offshore funds under Section 896 TCA 1997
• Form 8C - Return of Third Party Information by brokers and other intermediaries under Section 594 TCA 1997.

New legislation

Section 893 and Subsection 594(3) TCA 1997 have now been repealed, while Section 896 TCA 1997 has been replaced in its entirety. The new return required to be made under the amended Section 896 is the new Form 8D.

Commencement date for new Form 8D return

The new legislation applies as respects any chargeable period (as defined in Section 321 TCA 1997) commencing on or after 15 February 2001. However, to facilitate person who make returns on an ongoing basis, the automatic reporting provisions in Section 896 TCA 1997 will not apply to the period prior to 6 April 2001 provided the old format returns above have been furnished for the period up to and including 5 April 2001.

Persons who should make this return

Any person carrying on a trade or business in the State in the ordinary course of the operations of which that person acts as an intermediary in, or in connection with, the acquisition of a material interest in an offshore fund, or foreign life policy. The definition of intermediary is very wide and persons likely to be intermediaries are any person who acts in connection with the transaction. Persons such as auctioneers and accountants who provide an investment service as an ancillary to their core business would be considered to be intermediaries for the purposes of this legislation.

What intermediaries are affected?

Any person carrying on in the State a trade or business in the course of operations of which that person provides relevant facilities.

Relevant facilities means:

• The marketing in the State of offshore products
• The acting in the State as an intermediary in relation to the acquisition or disposal, in whole or in part, of offshore products by or on behalf of persons who are resident or ordinarily resident in the State, or
• The provision in the State of facilities for the making of payments from an offshore product to persons who are entitled to the offshore product, whether on the disposal, in whole or in part of the offshore product or otherwise.

Offshore product means:

• A material interest in an offshore fund, or
• A foreign life policy.

A material interest in an offshore fund is defined in Section 743(2) TCA 1997. Briefly, it is an interest in an investment vehicle, which is either a non-resident company, a unit trust the trustees of which are not resident in the State or an arrangement under the laws of a foreign country, which creates rights in the nature of co-ownership.

A foreign life policy is defined in Section 896(1) TCA 1997. It means a policy of assurance on the life of a person commenced either by a branch or agency (carrying on business in a State other than the State) of an assurance company, or by an assurance company (carrying on business in a State other than the State) other than by its branch or agency carrying on business in the State.

Return Filing

In the case of persons and bodies of persons (other than companies chargeable to corporation tax), the new format Form 8D returns are required for the year of assessment 2001, and subsequent years. However, where accounts of a trade or other business are normally made up to a date other than 31 December, the return may be made by reference to the date in the year of assessment to which the accounts are prepared provided that, on an ongoing basis, no periods are omitted from returns.

The first return on the new Form 8D must be made not later than 31 October 2002. In the case of companies chargeable to corporation tax, returns are required in respect of accounting periods commencing on or after 6 April 2001. They must be made not later than nine months from the end of the company’s accounting period.

Details to be included in the Return Form 8D

Intermediaries should ensure that they obtain the information necessary to make a full return such as:

• The full name and address of the person
• The person’s tax reference number
• A description of the relevant facilities provided, including a description of the offshore product concerned and the name and address of the person who provided the offshore product
• Details of all payments made (directly or indirectly) by the person in respect of the offshore product
• Details of all payments made (directly or indirectly) to the person in respect of the offshore product.

Client obligations

The legislation obliges the client to supply the information required by the intermediary to complete the return to the intermediary: Section 896(4) TCA 1997. In practice, intermediaries should obtain the information, including the client’s tax reference number, when the relevant facilities are being provided. Intermediaries should draw their clients’ attention to the following:

• Statutory penalties apply to clients who fail to furnish such details to an intermediary, or who furnish incorrect details knowingly or wilfully
• A person who acquires an offshore product, i.e. a material interest in an offshore fund or a foreign life policy is a chargeable person for income tax purposes. Such persons must make a return of income and include details of that investment in their tax return.

Statutory penalties may be imposed on an intermediary for:

• Failure to make a return
• Failure to include all details to be included in a return listed above
• Failure to take reasonable care to confirm the details referred to above.