Revenue Note for Guidance

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Revenue Note for Guidance

58 Penalties

Summary

This section provides penalties for any acts or omissions which would contribute to loss of revenue, such as—

  • failure to deliver returns, assess tax and pay tax;
  • failure to permit inspection of property for valuation purposes;
  • deliberate or careless delivery of returns, statements, evidence or valuations.

The section is based broadly on the penalty provision in Chapter 1 of Part 47 of the Taxes Consolidation Act 1997.

Penalties based on the tax due in a return are imposed where a person, fraudulently or negligently, fails to file a return. These tax-geared penalties came into effect by way of Ministerial Order on 1 October 2003.

Details

(1) A penalty of €3,000 is imposed for failure to comply with certain provisions of the Act, namely—

  • section 46(2), which makes a person, who is primarily accountable for the payment of tax, liable to deliver a return within 4 months of the valuation date and assess and pay the tax due;
  • section 46(6), which makes a person who is accountable for the payment of tax liable for delivery of a return within a specified period, when required in writing to do so;
  • section 46(7), which provides that a person who is accountable for the payment of tax must deliver and verify within a specified period a statement of particulars relating to property relevant to the assessment of tax, when required in writing to do so;
  • section 46(8), which makes a person who is accountable for the payment of tax liable for the delivery of an additional return when required in writing to do so;
  • section 46(9), which makes a person who is accountable for the payment of tax liable for the delivery within 3 months of an additional return when he/she becomes aware of any material error in or omission from the previous return.

A further penalty of €30 is imposed for each day that the contravention or failure continues after judgement has been given by the court.

(1A) Where a person deliberately or carelessly fails to comply with a requirement to deliver a return or additional return under section 46(2), (6) or (8), he/she is liable to a penalty of–

  • (a) €3,000 , and
  • (b) the amount of the difference specified in subsection (5A).

Subsection (1A) came into effect by way of Ministerial Order on 1 October 2003.

(2) A penalty of €3,000 is imposed on any person who, having the custody or possession of property, prevents or obstructs any authorised person in the performance of his/her functions in relation to the inspection of that property. This could arise under section 26(3), for example, where the Revenue Commissioners authorise a person to inspect any property and give them a report on the value of that property for the purpose of the Act. That subsection goes on to state that the person having custody or possession of the property shall permit inspection at such reasonable times as the Revenue Commissioners consider necessary.

(3) Heavier penalties are provided for where tax is underpaid as a result of deliberate or careless acts by an accountable person. This can refer to any one of the following 4 acts as a result of which too little tax is paid:

  • delivery of incorrect returns or additional returns;
  • making incorrect statements, valuations, etc. in connection with any property comprised in the taxable gift or inheritance;
  • making incorrect statements, valuations, etc. for the purpose of claiming any allowance, deduction, exemption or relief;
  • making incorrect statements, valuations, etc. in connection with any other matter.

The penalty is €6,345 plus the difference in tax involved as a result of the deliberate or careless act.

(4) Where any return, additional return, statement, declaration, evidence or valuation is delivered by a person neither deliberately nor carelessly and it comes to his/her notice later that it is incorrect, then, unless the error is remedied without unreasonable delay, such matter will be treated as having been negligently done by him/her. In these circumstances, the consequences in subsection (3) by way of penalty follow.

(5) The difference referred to in subsection (3) is defined as the tax that would have been lost by the incorrect return, statements, valuations, etc.

(5A) The difference referred to in paragraph (b) of subsection (1A) is the difference between—

  • (a) the amount of tax paid by that person in respect of the taxable gift or taxable inheritance to which the return or additional return relates, and
  • (b) the amount of the tax that would have been payable if the return or additional return had been correct.

Subsection (5A) came into effect by way of Ministerial Order on 1 October 2003.

(6) Where anything referred to in subsection (3) is delivered, made or furnished on behalf of a person, it will be deemed to have been delivered, made or furnished by that person unless he/she proves that it was done without his/her knowledge and consent.

(7) Any person who assists in or induces the delivery, making or furnishing of any return, additional return, etc. which he/she knows to be incorrect is liable to a penalty of €3,000.

(8) The section will not affect any criminal proceedings.

(9) The provisions of certain sections of the Taxes Consolidation Act 1997 are extended to capital acquisitions tax. The provisions in question relate to penalty proceedings. The incorporation of these provisions into capital acquisitions tax law enables the Revenue Commissioners to use these provisions for infringements of the capital acquisitions tax code on the same basis as they are used for infringements of the income tax code.

The provisions which are incorporated into the capital acquisitions tax code are:

  • section 987(4), which provides that certain statements, signed by an officer of the Revenue Commissioners, may be tendered in evidence in Court proceedings;
  • section 1062, which provides that, where a penalty cannot be calculated because the tax on which it is based has not been finally ascertained, proceedings may be initiated and adjourned until the amount of tax outstanding has been ascertained;
  • section 1063, which provides that proceedings for the recovery of any fine or penalty may be begun at any time within 6 years of the date on which the fine or penalty was incurred;
  • section 1064, which provides for the institution of summary proceedings in certain circumstances within 10 years of the date of the committing of an offence or incurring of a penalty;
  • section 1065, which provides that the Revenue Commissioners may, at their discretion, mitigate any fine or penalty, either before or after judgement or stay any proceedings for the recovery of a fine or penalty. The Minister for Finance is also empowered to mitigate any fine or penalty, either before or after judgement;
  • section 1066, which provides that any person who gives false evidence on oath or in any written statement, will be regarded as having committed perjury;
  • section 1068, which provides for an extension of the times allowed to an individual to comply with a request made by the Revenue Commissioners, and section 1077E, which provides for penalties for deliberately or carelessly making incorrect returns, etc.

The provisions referred to above are subject to the provisions of the section and are applied with any necessary modifications to capital acquisitions tax.

Relevant Date: Finance Act 2015