Tax avoidance

Scheme challenged under the GAAR

John is a self-employed individual. In 2015 he entered into a tax avoidance transaction which saved him €25,000 in tax that year. He paid €10,000 in fees to have the scheme put in place.

On 1 December 2017 Revenue challenges the scheme because it did not work under the GAAR (section 811C TCA 1997). An assessment was then issued. John appeals the assessment. In December 2018 the Appeal Commissioners find in Revenue's favour and John settles his bill on 11 January 2019. Revenue informs John that he owes:

If John had submitted a Qualifying Avoidance Disclosure

If the disclosure had been submitted by 31 December 2017 then the rate of tax avoidance surcharge could have been reduced to 5%. A portion of the interest charged would not have arisen. John would have not needed to go to the Appeal Commissioners, and may not have incurred any legal costs. This could have reduced the settlement payment to Revenue which he eventually made by up to approximately €8,308.

If John had submitted a Protective Notification

John would have significantly reduce his tax bill. He would not have to pay the surcharge. Also the interest charge would only begin to accrue 30 days after Revenue amended his assessment. This would have reduced the settlement payment to Revenue which he eventually made by approximately €11,764. A Protective Notification must be filed within 90 days after the commencement of the transaction.