A farmer has won a €72,728 tax battle with the Revenue Commissioners concerning a dispute over a €140,656 Department of Agriculture Single Payment Scheme (SPS) payment.
Revenue issued the farmer with the €72,728 tax demand after finding that it arose as a liability on the €140,656 payment that the farmer did not include in his own annual income tax returns to Revenue.
The farmer contended that the Revenue Commissioners were out of time to issue the amended €72,728 assessment under tax law which provides for a four-year time limit.
The farmer appealed the decision to the Tax Appeals Commission (TAC) and now the TAC has found in his favour.
Appeal Commissioner, Claire Millrine has found that the Revenue Commissioners were incorrect to issue the demand for the €72,728 as it was outside of the time limits contained in the Tax Acts and has directed that the €72,728 assessment be reduced to ‘nil’.
Ms Millrine stated that she was satisfied that the appellant’s income tax return for 2011 “was complete, accurate and truthful having regard to the facts of this particular appeal”.
In her findings, Ms Millrine found that tax legislation provides that no additional tax shall be payable by a chargeable person after the end of the relevant four-year period.
Ms Millrine states that the section on time limits clearly prohibits the imposition of any additional tax burden outside the four-year period in the case of a person who has made a fully compliant return.
He stated that Tax Appeals Commissioners have no authority or discretion to dis-apply the timelines.
Ms Millrine has found that as Revenue issued the demand out of the time limits laid down, the substantive issue, whether the SPS payment from the Dept of Agriculture is taxable as income in the hands of the farmer or is instead taxable as income received by his farm firm, does not arise.
The farmer had argued that the €140,656 is taxable as income received for the company he formed and owned.
The TAC ruling reveals that the Commission has been requested to state and sign a case for the opinion of the High Court in respect of the determination.
The farmer has a number of land interests and on May 30th, 2011 incorporated his farming business into a company along with all asset transfers and herd number.
In October 2011, the €140,656 SPS payment from the Deptarment of Agriculture was paid to the farmer’s bank account and then subsequently transferred to the bank account of new company.
The farmer did not include the SPS payment in his income tax return for 2011 but the SPS payment was included in Corporation Tax return for the year ended May 31st, 2012 for new farming enterprise.
The farmer told the TAC hearing that it was a clerical issue that the payment was made to his account, as opposed to the bank account of his company, which had been provided to the DAFM.
In May 2012, the farmer applied to the Dept to transfer the SPS entitlements to the farm firm as he had missed the previous 'transfer window' prior to the end of May 2011.
A witness for the farmer at the TAC stated that the farmer derived no benefit from the entitlements which were paid directly to the farm firm and utilised by his farm firm.
In 2014, Revenue told the farmer that it was to carry out an audit into his tax affairs and the two sides liaised in relation to the tax treatment of the SPS payment until January 2017 and Revenue issued its € €72,728 tax demand in April 2017.
