A recent case before the Appeal Commissioner concerned directors of a company who had claimed a credit for PAYE paid.
Facts
· They had availed of the debt warehousing scheme during Covid
· Revenue disallowed their claim under Section 997A TAC 1997 as the PAYE deductions had not actually been paid over to Revenue
· This is because they were part of the Debt Warehouse Scheme
· All the relevant returns were made to Revenue
Analysis
The core issue in the case concerned Section 997A of the Taxes Consolidation Act 1997, which deals with tax credits for directors with a “material interest” in a company (defined as owning more than 15% of the ordinary share capital).
Under this provision, no credit is given for tax deducted from directors’ salaries unless there is documentary evidence showing the tax was actually remitted to Revenue.
The appellants’ position was that the application of Section 997A should have been modified by their participation in the Debt Warehousing Scheme, which they believed should have protected them from personal liability while the company’s tax debts were warehoused.
Revenue’s position was that Section 997A is mandatory in its requirements.
They noted the company had outstanding employer PAYE/PRSI liabilities, and while the company had been making payments toward its warehoused debt, these payments were inconsistent and not in accordance with the terms of the Debt Warehousing Scheme.
Consequently, the warehousing arrangements were revoked, making the debts immediately due.
Determination
In her determination, the Appeal Commissioner expressed sympathy for the appellants but noted that her jurisdiction was limited to interpreting and applying the law as enacted. She found that the plain meaning of Section 997A(3) is clear – no credits shall be allocated to directors in respect of deductions made by the company from their emoluments where the company has not remitted those taxes to Revenue.
The Commissioner found no legislative provisions supporting the appellants’ interpretation that Section 997A was restricted or modified due to participation in the Debt Warehousing Scheme. As the burden of proof in tax appeals rests with the appellant, and the appellants had not discharged this burden, the Commissioner determined that Revenue was correct in disallowing the tax credits under Section 997A.
The appeal was dismissed, and the assessments for the relevant years were upheld. The Commissioner noted that while the decision would be disappointing for the appellants, she was charged with ensuring that taxpayers pay the correct tax and duties according to the law.
