Revenue has published a USC manual as part of the Section 16 Tax & Duty Manuals. The manual, in fourteen separate subparts, covers the administration and application of the USC and deals with issues such as the USC charge on bank bonuses, maintenance payments and property reliefs. Additionally in the manual the treatment of capital allowances and balancing charges for USC purposes is clarified.

As reported in Chartered Tax News in June last year Revenue confirmed with Chartered Accountants Ireland that the USC should not apply on Case V balancing charges on the basis that no deduction is allowed in the calculation of the USC in respect of Case V capital allowances. At the time of reporting a Revenue eBrief was expected to issue clarifying this position. Revenue subsequently advised that clarification would issue as part of their USC manual rather than by a separate eBrief. The publication of the USC manual includes a part ‘USC Capital Allowances’ and notes that ‘where capital allowances are not deductible, (for example in Case V situations or in respect of property incentives – ..balancing charges which might arise following the disposal of an asset are not to be considered as relevant income for the purposes of USC as the allowances which are being recovered by the balancing charge were not deductible for USC purposes in the first instance’

Finance Bill 2013 as initiated (section 2(e)) provides that a balancing charge is subject to the USC in the case where capital allowances to which the charge refers were deductible for USC purposes.

We understand that the ROS Form 11 2012 is not correctly excluding the balancing charge from relevant income for the purpose of calculating the amount of USC due. We have raised this issue with Revenue and we understand that they are reviewing the matter. Members will be kept updated on any developments in this area.

The USC manual is published on the Revenue website under the Section 16 Tax & Duty Manual at Part 18D.