A partner in an accountancy practice - who also owns 14 rental properties here - has lost his €1.584 million income tax battle with the Revenue Commissioners.
It follows the Tax Appeals Commission (TAC) finding that he is liable for the €1.584 million tax assessment issued to him by the Revenue Commissioners covering a three-year period.
In her findings, Commissioner, Clare O’Driscoll found that the accountant’s self assessment tax returns to Revenue for the years 2011, 2012 and 2013 “were not correct and contained amounts which represented significant understatements of the profits or gains” which fell to be charged to tax in those years.
Ms O’Driscoll found that the appellant has not succeeded in showing that the relevant tax was not payable.
The partner in the accountancy firm received €2.72 million in income from the practice over the three years comprising €845,152 in 2011, €1.11 million in 2012 and €761,963 in 2013.
The accountant’s work covers the areas of accounts preparation, bookkeeping, tax returns, obtaining loans for clients and preparing business plans and his €2.72 million income from the firm included profits of €1.86 million from the practice.
The accountant owns 14 properties in Ireland receiving net rental income of €313,380 over the three years and his total income for the three years amounted to €3.17 million.
In his Form 11 self assessment return for the three years he stated that his cumulative tax liability was €219,085 comprising €19,476 in 2011; €134,298 in 2012 and €65,311 for 2013.
The Revenue Commissioners disputed this and in their amendment assessments issued to the accountant stated that the correct tax liability for 2011 should be €374,555, €744,522 for 2012 and €655,125 for 2013.
The accountant appealed the Revenue assessments to the TAC and the largest single income figure at issue between the accountant and Revenue was €457,923 that was lodged into his account in 2013.
The accountant claimed that the €457,923 was a loan and that he repaid the loan by transferring money into a hotel business and by investing it in a home renovations business.
However, after hearing two days of evidence and submissions into the appeals, Ms O’Driscoll found that the accountant did not produce any documentary evidence to substantiate these claims of repaying the money.
Ms O’Driscoll found that the accountant has not discharged the burden of proof to establish that the €457,923 was a loan and determined that the €457,923 was a gain or a profit.
There was no matter of tax law between the accountant and Revenue in the appeals and the dispute between the parties rested on the identification of the correct quantum of income received by the accountant and the various tax allowances he was claiming.
Revenue told the TAC that the appellant has failed to submit any documentation which tends to substantiate any of the disputed areas of income or expenditure.
The accountant was claiming to offset expenditure of €102,491 per annum concerning loan interest payments against his tax bill on his Irish properties during 2011, 2012 and 2013.
In her findings, Ms O’Driscoll stated that the appellant has not submitted loan statements in relation to the interest which he claims he paid for nine of the 14 Irish properties and can therefore only entitled to off-set loan interest expenditure payments of €18,255 per annum for the three years.
The accountant was also claiming a cumulative repair and maintenance bill of €150,702 on his properties over the three years that included the employment of two people to oversee the 14 properties.
However, Ms O’Driscoll determined that the accountant is entitled to zero allowance concerning repairs and maintenance after finding that the appellant has not submitted any other documentary evidence in relation to the employment of the two or email correspondence to or from the employees in relation to works required on the properties.
