Revenue Note for Guidance

Section 134A Penalties

Summary

This section provides for a penalty of €1,265 plus a tax geared further penalty where a person acts deliberately or carelessly, in relation to—

(a) the execution of an instrument in which all the facts and circumstances affecting the liability of the instrument to duty are not disclosed in the instrument or in a statement to which section 8(2) relates,

(b) the entering of an incorrect electronic instruction in the CREST system,

(d) the failure to deliver an electronic or paper return under the e-stamping system

which gives rise to an underpayment in amount of stamp duty due and payable. The section provides for a specific level of penalty to apply depending on whether the category into which the person’s duty default falls is deliberate or careless. The section puts the practices as regards the level of tax geared penalties sought in Revenue audits and investigations by reference to the Code of Practice for Revenue Auditors on a statutory footing. The section applies to penalties incurred on or after 24 December 2008 in relation to the offences contained in paragraph (a) and (b) above and to penalties incurred on or after 30 December 2009 in relation to the offences contained in paragraph (c) above and on or after 7 July 2012 in relation to the offences contained in paragraph (d) above.

Details

(1) “carelessly” means failure to take reasonable care;

“liability to duty” means a liability to the amount of the difference specified in subsection (7), (8) or (9) arising from any matter in subsection (2) or (4);

“instruction”, “relevant system” and “system-member” take their meaning from section 68(2);

“person” means a system-member for the purposes of subsection (2)(b) and (4)(b) (i.e. the entering of an incorrect electronic instruction in the CREST system), and means an accountable person in relation to subsections (2)(c) and (4)(c) (i.e. the delivery of an incorrect electronic or paper return under the e-stamping system) and subsection 2(d) (i.e. the non-delivery of an electronic or paper return under the e-stamping system);

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

(a) 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 duty of that person will start, and

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

“qualifying disclosure” is a disclosure of complete information in relation to, and full particulars of, all matters occasioning a liability to duty that gives rise to a penalty, made in writing and accompanied by—

(a) 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

(b) a payment of the duty and interest on late payment of that duty.

In addition—

all qualifying disclosures (prompted and unprompted) in the deliberate behaviour category of duty default (subsection (3)) must state the amounts of all liabilities to tax and interest, in respect of all tax-heads and periods, where liabilities arise, as a result of deliberate behaviour, that were previously undisclosed, and
all qualifying disclosures (prompted and unprompted) in the ‘careless behaviour’ category of duty default (subsection (5)) must state the amounts of all liabilities to duty and interest, where liabilities arise, as a result of careless behaviour, that were previously undisclosed;

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

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

(a) before any investigation or inquiry had been started by them or by a Revenue officer into any matter occasioning a liability to duty 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 duty will start, before that notification.

(2) Where deliberately—

(a) (a) a person executes an instrument in which all the facts and circumstances affecting the liability of the instrument to duty are not disclosed in the instrument or in a statement to which section 8(2) relates,

(b) (b) a system-member enters an incorrect electronic instruction in the CREST system

(d) (d) an accountable person fails to deliver an electronic or paper return under the e-stamping system,

that person will be liable to a penalty of €1,265 and a further penalty.

(3)(a), (b), (c) & (d) In each case the maximum further penalty, that can apply where the circumstances outlined in subsection (2) occur, is an amount equal to the amount of underpaid duty (100% of the underpayment) where the person who incurred the penalty has not cooperated with the Revenue Commissioners.

Where the person co-operates with the Revenue Commissioners and—

(3)(i) does not make a qualifying disclosure, the penalty will be reduced to an amount equal to 75% of the underpaid duty,
(3)(ii) makes a prompted qualifying disclosure (for example, after receiving an audit letter from the Revenue Commissioners), the penalty will be reduced to an amount equal to 50% of the underpaid duty,
(3)(iii) makes an unprompted qualifying disclosure (that is before the person has been contacted by the Revenue Commissioners, in circumstances where the person has no reason to believe that Revenue has commenced an inquiry or investigation into the person’s tax affairs) the penalty is reduced to an amount equal to 10% of the underpaid duty.

(4) Where carelessly but not deliberately—

(b) (b) a system-member enters an incorrect electronic instruction in the CREST system,

(d) (d) an accountable person fails to deliver an electronic or paper return under the e-stamping system,

that person will be liable to a penalty of €1,265 and a further penalty.

(5)(a) In each case the maximum further penalty, that can apply where the circumstances outlined in paragraphs (a), (b) or (c) of subsection (4) occur, is an amount equal to the amount of underpaid duty reduced to—

40% where the penalty exceeds 15% of the full duty payable on the instrument, electronic instruction, or electronic or paper return, as the case may be, and
20% where the penalty does not exceed 15% of the full duty payable on the instrument, electronic instruction or electronic or paper return, as the case may be,

where the person who incurred the penalty has not co-operated with the Revenue Commissioners.

(5)(b)(I) Where the penalty exceeds 15% of the full duty payable on the instrument, electronic instruction, or electronic or paper return, as the case may be, and the person co-operates with the Revenue Commissioners and—

does not make a qualifying disclosure, the penalty will be reduced to an amount equal to 30% of the underpaid duty,
makes a prompted qualifying disclosure (for example, after receiving an audit letter from the Revenue Commissioners), the penalty will be reduced to an amount equal to 20% of the underpaid duty,
makes an unprompted qualifying disclosure (that is before the person has been contacted by the Revenue Commissioners, in circumstances where the person has no reason to believe that Revenue has commenced an inquiry or investigation into the person’s tax affairs) the penalty is reduced to an amount equal to 5% of the underpaid duty.

(5)(b)(II) Where the penalty does not exceed 15% of the full duty payable on the instrument, electronic instruction, or electronic or paper return, as the case may be, and the person co-operates with the Revenue Commissioners and—

does not make a qualifying disclosure, the penalty will be reduced to an amount equal to 15% of the underpaid duty,
makes a prompted qualifying disclosure (for example, after receiving an audit letter from the Revenue Commissioners), the penalty will be reduced to an amount equal to 10% of the underpaid duty,
makes an unprompted qualifying disclosure (that is before the person has been contacted by the Revenue Commissioners, in circumstances where the person has no reason to believe that Revenue has commenced an inquiry or investigation into the person’s tax affairs) the penalty is reduced to an amount equal to 3% of the underpaid duty.

(5A)(a) The maximum further penalty, that can apply where the circumstances outlined in paragraph (d) of subsection (4) occurs, is an amount equal to the amount of underpaid duty reduced to 40% of the duty where the person who incurred the penalty has not cooperated with the Revenue Commissioners.

Where the person co-operates with the Revenue Commissioners and—

(5A)(b)(i) does not make a qualifying disclosure, the penalty will be reduced to an amount equal to 30% of the underpaid duty,
(5A)(b)(ii) makes a prompted qualifying disclosure (for example, after receiving an audit letter from the Revenue Commissioners), the penalty will be reduced to an amount equal to 20% of the underpaid duty,
(5A)(b)(iii) makes an unprompted qualifying disclosure (that is before the person has been contacted by the Revenue Commissioners, in circumstances where the person has no reason to believe that Revenue has commenced an inquiry or investigation into the person’s tax affairs) the penalty is reduced to an amount equal to 5% of the underpaid duty.

(6) Where neither deliberately nor carelessly,—

(a) a person executes an instrument in which all the facts and circumstances affecting the liability of the instrument to duty are not disclosed in the instrument or in a statement to which section 8(2) relates,

(b) a system-member enters an incorrect electronic instruction in the CREST system,

(d) an accountable person fails to deliver an electronic or paper return under the e-stamping system,

and it subsequently comes to the person’s notice that the instrument, electronic instruction, or electronic or paper return was incorrect or not delivered, then the person must remedy the error without unreasonable delay and failing that, the incorrect instrument, instruction or return, or the failure to deliver the return, will be treated as having been deliberately made.

(7) The amount of the further penalty arising under subsection (3)(a), (5)(a)(i) or (5)(b)(i), before any percentage reduction is applied to the penalty, is the amount of the difference between the duty payable on the instrument based on the facts and circumstances set forth and delivered and the amount of the duty that would have been payable if the instrument and any accompanying statement had fully and truly set forth all the facts and circumstances affecting the liability of the instrument to duty.

(8) The amount of the further penalty arising under subsection (3)(b), (5)(a)(ii) or (5)(b)(ii) before any percentage reduction is applied to the penalty, is the amount of the difference between the duty paid (if any) and the duty that would have been payable had the instruction been entered correctly.

(9) The amount of the further penalty arising under subsection (3)(c), (5)(a)(iii) or (5)(b)(iii), before any percentage reduction is applied to the penalty, is the amount of the difference between the duty payable in respect of the instrument based on the facts and circumstances disclosed on the return and the amount of duty that would have been payable had all the facts and circumstances affecting the liability of such instrument to duty or the amount of the duty with which such instrument is chargeable, that are required to be disclosed on such return had been disclosed to the Revenue Commissioners.

(9A) The amount of the further penalty arising under subsections (3)(d) and (5A), before any percentage reduction is applied to the penalty, is the amount of the duty that would have been payable if a return had been delivered.

(10)(a) Where a second qualifying disclosure is made by a person within 5 years of that person’s first qualifying disclosure in relation to any of the occurrences referred to in subsection (2) and the person co-operates with the Revenue Commissioners and makes —

a prompted qualifying disclosure, the penalty is reduced to an amount equal to 75% of the underpaid duty,
an unprompted qualifying disclosure, the penalty is reduced to 55% of the underpaid duty.

(10)(b) Where a second qualifying disclosure is made by a person within 5 years of that person’s first qualifying disclosure in relation to any of the occurrences referred to in subsection (4) and the person co-operates with the Revenue Commissioners, where the duty underpaid exceeds 15% of the full duty payable on the instrument, electronic instruction, or electronic or paper return, as the case may be, and the person made —

a prompted qualifying disclosure, the penalty is reduced to 30% of the underpaid duty, and
an unprompted qualifying disclosure, the penalty is reduced to 20% of the underpaid duty.

(11) Where a third or subsequent qualifying disclosure is made within five years of that person’s second qualifying disclosure, there will be no reduction in the further penalty referred to in subsection (3) or no further reduction in the reduced penalty of 40% referred to in subsection (5)(a) in relation to the qualifying disclosure (whether prompted or unprompted).

(12) Matters referred to in the definition of a prompted or unprompted qualifying disclosure do not include matters occasioning a liability to duty relating to, a person that is one of a class of persons being investigated by Revenue or a statutory body, a person who is within the scope of an enquiry being carried out wholly or partly in public, or a person who is linked, or about to be linked, publicly with such matters.

Relevant Date: Finance Act 2014