It’s unclear from the unattributed and undated document which appeared on the Department of Finance website over the weekend exactly who carried out the analysis. However it does seem that the FA 2006 restrictions on tax relief claims met their intended objective of an effective tax rate of around 20% on high earning, highly sheltered individuals.

For accountants involved in tax practice, perhaps the most striking feature of the report will be the item it doesn’t highlight. That is how few taxpayers are affected by the s485C TCA97 regime. The total number of cases involved where the restrictions applied to a greater or lesser extent seems to be around 350. These date from 2007, the first year of operation of the restrictions and by definition are cases involving earnings of €250,000 or more. From Revenue’s statistical tables, the total number of taxpayers in this earnings category is perhaps around 15,000. While the analysis does indicate the effectiveness of the restrictions, it also confirms that highly aggressive tax planning involving claims derived from multiple types of relief is not nearly as prevalent as might generally be believed.

A table to the report lists the relief claims which were curtailed, and their frequency of occurrence. Top of that league are hotel capital allowances claims. As might be expected, the original Section 23 type reliefs barely figure. Relief on interest on borrowings applied to acquire an interest in a company was restricted on almost 80 occasions. It is unclear why the restriction should ever have applied to this type of investment, and bizarre that it continues to apply at a time when companies need investment from whatever source they can obtain it.

The full analysis is reproduced below at section 2.02.