Scheme challenged under specific anti-avoidance provision
Mary is an employee subject to PAYE. In 2015 she entered into a tax avoidance transaction, which was not disclosable under the Mandatory Disclosure regime. This saved her €25,000 in tax that year. She paid fees of €10,000 to take part in that scheme.
On 1 December 2017 Revenue challenges the scheme under one of the specific anti-avoidance provisions. An assessment is then issued. Mary appeals the assessment. In December 2018 the Appeal Commissioners find in Revenue's favour. Mary wishes to settle her tax bill on 11 January 2019. Revenue inform Mary that she owes the following:
Scheme challenged under specific anti-avoidance provision- without a qualifying disclosure.
Details | Amount |
Original tax |
€25,000 |
Interest (€25,000 x 0.0219% x 1,198 days approximately) |
€6,559 |
Total tax plus interest |
€31,559 |
Tax Avoidance Surcharge (€25,000 x 30%) |
€7,500 |
Total due to Revenue |
€39,059 |
Fees to promoter |
€10,000 |
Legal fees (estimate for Appeal Commissioners) |
€5,000 |
Total cost of taking part in scheme |
€54,059 |
If Mary had submitted a qualifying avoidance disclosure before 1 December 2017 then the rate of tax avoidance surcharge could have been reduced to 3%. A portion of the interest charged would not have arisen. Mary would not need to go to the Appeal Commissioners and may not have incurred any legal costs. This could have reduced the settlement payment which she eventually made to Revenue by up to approximately €8,978, as follows:
Scheme challenged under specific anti-avoidance provision- with a qualifying disclosure.
Details | Amount |
Original tax |
€25,000 |
Interest (€25,000 x 0.0219% x 791 days approximately) |
€4,331 |
Total tax plus interest |
€29,331 |
Tax Avoidance Surcharge (€25,000 x 3%) |
€750 |
Total due to Revenue |
€30,081 |
Fees to promoter |
€10,000 |
Legal fees (estimate for Appeal Commissioners) |
€0 |
Total cost of taking part in scheme |
€40,081 |