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Here you can access relevant source documents which support the summaries of key tax developments in Ireland, the UK and internationally

Source documents include:

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TALC-Representations to Revenue on Finance Bill Matters

Mr Liam Irwin
Deputy Secretary
Office of the Revenue Commissioners
Dublin Castle
Dublin 2

15 February 2006

Dear Liam

Main TALC Meeting – 21 February 2006

I am writing to you in your capacity as chairman of the Revenue TALC representation to highlight a number of matters which CCAB-I propose to raise at the forthcoming Main TALC meeting. For good order I am circulating this letter to Ken McMoreland in his capacity as Chair of Main TALC, and to Caroline Devlin of the Law Society.

Agenda Item 4 – Finance Bill 2006

General

We feel we need to clarify the role of TALC in discussing the Finance Bill. We are mindful of previous debate in this regard and the view that discussion on tax administrative issues can properly inform the drafting of tax legislation. We are not clear that conducting Main TALC on the same day as the Committee Stage of the Bill commences lends credence to this view.

S52 FB06/TCA97 s95A

We consider that this measure will actively encourage a broader application of the most up to date accounting principles, and is therefore a positive development. There may be issues arising from the cross referencing of the provision to TCA97 s94(3) which we could explore further.

Operation of PAYE following the elimination of the remittance basis

Without prejudice to the serious concerns raised by us at the last Main TALC meeting, and in our pre-Finance Bill submission to the Minister for Finance, the proposed elimination of the remittance basis in favour of the Schedule E rules gives rise to several operational difficulties when applying PAYE. The view of Revenue is requested on the following:

  1. Treatment of Pension Contributions
    It seems that employer contributions previously outside of an income tax charge might now be taxable as a BIK. Similarly, employee contributions may not attract relief.
  2. Operation of PAYE in circumstances where no income tax charge would arise
    PAYE is potentially chargeable on remuneration in cases where the individual is merely exercising incidental duties in Ireland but is exempt from Irish income tax under a Double Taxation Agreement. If operated, double PAYE withholding could arise and a tax return and repayment claim would be required, causing unnecessary cash flow difficulties and cost to the taxpayer along with additional work for Revenue in processing a return / making repayment.
  3. Applicability of PAYE in circumstances where primary taxing rights are overseas
    PAYE is potentially chargeable on remuneration in cases where the individual is exercising limited duties in Ireland but some relief will be available under a DTA. One example might be the case of a UK employee on UK payroll exercising certain limited duties in Ireland. If operated, double PAYE withholding could arise where the employee suffers PAYE already in the home country with consequent cash flow difficulties and unnecessary administration as outlined above.
  4. Advance approval from Revenue regarding apportionment of income
    Serious practical difficulties will arise unless Revenue can respond without delay to requests for approval of apportionment methods. It should also be noted that in many instances, while it will be clear that there will be foreign duties involved, the extent of foreign duties will not always be known in advance.
    On what basis will apportionments be accepted, particularly where precise foreign duties elements are not available in advance?
  5. 2005 Bonuses paid in 2006
    E-brief 43/2005 did not go far enough to clarify that bonuses earned prior to 1 January 2006 would be taxable under the old rules. Confirmation on this point is needed so that such bonus payments can be made in 2006 without operation of PAYE.
  6. Share Options
    The treatment of share options held at 1 January 2006 where these were granted prior to that date is unclear. Previously these options would only have been liable to capital gains tax.
  7. Relocation and similar expenses
    The move to the Schedule E basis will result in increased assignment costs overall for companies. Aside from the tax costs, other assignment costs can include accommodation, schooling, health care, cost of living adjustments, return flights etc. In the interests of fairness, the proposed change in the tax status of the remuneration must occur in tandem with a review of the tax status of these additional relocation and related costs which arise directly as a result of the assignment and do not represent additional personal remuneration for the assignee.

FB06 s118/TCA97 s811

  1. The potential scope of protective notifications under s118 is such as to require notifications to be made on matters which practitioners might consider to be routine. The making of an Additional Voluntary Contribution to a pension in advance of the return filing date, or of an investment attracting Film Relief, are examples. What procedures or measures do Revenue propose taking to ensure that any and all transactions which have as a consequence the mitigation of tax will not require protective notifications? We are very concerned about the impact of s118 on compliance costs for taxpayers if such procedures and measures are not forthcoming.
  2. The introduction of a broad protective notification system is inconsistent with the number of instances to date in which Revenue have sought to invoke s811. Are we to take it that s811 is to be applied more frequently going forward?
  3. S118(6) mandates the use of a prescribed form. When will that form be available, given that it may be necessary to commence making protective notifications almost immediately after the date of passing of Finance Act 2006 as it is currently drafted?
  4. If a taxpayer makes a protective notification in respect of a transaction in one year, and repeats the transaction in subsequent years, must the protective notification be repeated? Must a notification be made only on behalf of the promoters of a scheme, for instance a Film Relief scheme, or also on behalf of each individual investor?

S41 FB06/S531 TCA97

  1. It would appear an application for a C2 can be refused unless there is “good reason to expect” that the contractor will comply with future tax obligations. Can Revenue state the objective basis on which such a power of refusal would be exercised?
  2. Will a taxpayer's previous compliance record have a bearing on “good reason to expect”? If so, could taxpayers who have no previous Irish tax compliance record be prejudiced? What note will be taken of compliance records elsewhere?
  3. The introduction of a section which makes relief from a penal provision contingent on future compliance behaviours is an unwelcome development and a potentially dangerous precedent. Can Revenue comment please?

S16 FB06/TCA97 ss985E, 985F

The proposed sections 985E and 985F operate in conditions respectively where “it appears to an officer of the Revenue Commissioners” and “where it appears to the Revenue commissioners”. We request guidelines on what might give rise to these subjective judgments.

Agenda Item 6 – Taxpayer Service Issues

  1. Why has there been such a delay in the issue of Tax Credit Certificates for 2006?
  2. Some time ago, under the auspices of Main TALC, Revenue published Revenue e-Brief 47/2004 – Revenue Contact List (Exceptional Circumstances). Can Revenue indicate the frequency of updating the list, and if it might now be appropriate to broaden the scope of the list to specify technical experts in the respective regions.
  3. We have anecdotal evidence of the routine use of call answering machines in districts. Can Revenue outline its policy in this regard please.
  4. It seems that the divergence in customer service between Large Cases Division and the other Revenue regions is growing. We would ask for your observations on this matter in the context of your Customer Service Charter.
  5. We wish to explore the establishment of a mechanism whereby accountants could e-mail queries to the various districts and chart the processing of the queries. This would be in tandem with Revenue's proposed system for charting the processing of correspondence in relation to PAYE matters due to be introduced later on this year.

Matters arising from the last meeting for follow-up

Application of the Corporation Tax Surcharge

We note there has been no clarification of this matter to date in the Finance Bill.

We propose to deal with other outstanding matters through the subcommittees.

We look forward to meeting with you and your colleagues on 21 February next.

Kind regards.
Yours sincerely

Brian Keegan
Director of Taxation