Revenue Note for Guidance

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Revenue Note for Guidance

600P Failure to comply with requirements of this Chapter

Summary

Section Section 600P applies to a company to which certificates of qualification were issued and either those certificates were issued when they should not have been because the company did not meet the relevant conditions, or the certificates were correctly issued and the company subsequently ceases to meet the relevant conditions.

Details

(1)Section Section 600P applies to a company or a relief group of which the company is a member, which did not satisfy or no longer satisfy the relevant conditions as set out in section 600F in order for a company to hold certificates of qualification.

This subsection applies to a company (in this subsection referred to as “the first-mentioned company”) to which certificates of qualification were issued which are valid and the following arises—

  1. (1)(a)the company no longer satisfies section 600F(2)(a). These are conditions that a company must satisfy in order to apply to the Revenue Commissioners for the certificates of qualification,
  2. (1)(b)any company that is a member of the relief group of which the company is a member does not satisfy the conditions in paragraphs (b) and (c) of section 600F(2). These are conditions which must be satisfied for a company to apply for certificates of qualification including conditions that the relief group must satisfy e.g., be unlisted, not subject to a recovery order and have fully paid-up shares. Further, all members of relief group must be less than 7 years old; or
  3. (1)(c)the relief group of which the company is a member does not satisfy the conditions in section 600F(2)(d) (i.e. it is not an SME or is an undertaking in difficulty).

(2)A company that holds certificates of qualification and does not satisfy the required conditions to hold these must return the certificates of qualification to the Revenue Commissioners.

(2)(a)A company to whom subsection (1) applies—

  1. (a)(i)cannot give certificates of qualification to a qualifying investor or qualifying partnership, and
  2. (a)(ii)must return those certificates of qualification to the Revenue Commissioners.

(2)(b)Where a company returns its certificates of qualification to the Revenue Commissioners, the Revenue Commissioners will withdraw the certificates.

(2)(c)When the Revenue Commissioners withdraw the certificates of qualification, the certificates of qualification shall cease to be valid from the date of withdrawal.

(3)A charge to tax may arise in respect of an investment of a company that provided certificates of qualification to an investor or partnership in circumstances where it should not have done so.

(3)(a)The provisions of subsection (3) shall apply to an investment and a company, where the company provided certificates of qualification to an investor or partnership in circumstances where it should not have done so.

(3)(b)The company to which this subsection applies shall be charged to corporation tax under Case IV of Schedule D for the accounting period in which the investment was made on an amount equal to the maximum tax relief that could have been claimed by an investor on a

(3)(c)gain from an investment that was made on foot of those certificates of qualification. The amount to which this subsection applies is an amount calculated by the following formula:

(I X 2 X 17 per cent) X 4

where I is the investment to which this subsection applies.

The amount within the charge to tax under this section shall be treated—

  1. (c)(i)as income against which no loss, deficit, expense or allowance may be set off, and
  2. (c)(ii)as not forming part of the income of the company for the purposes of calculating a surcharge under section 440.

(4)(a)Where during the validity period of the certificates of qualification there is a material change in the company’s position such that the company no longer satisfies the conditions under section 600F(2), which are the conditions that a company must satisfy in order to apply to the Revenue Commissioners for certificates of qualification then—

  1. (a)(i)the company, or
  2. (a)(ii)any officer or agent of the company who has knowledge of the change,

shall inform the Revenue Commissioners within 30 days of becoming aware of any change in circumstances that would impact a company’s entitlement to receive or hold certificates of qualification.

(4)(b)Where there is a failure to comply with paragraph (a) a penalty may apply.

  1. (b)(i)An individual who does not comply with paragraph (a) and notify the Revenue Commissioners where this is a change in the position of the company impacting the entitlement of the company to hold the certificates of qualification will be liable to a penalty of €3,000.
  2. (b)(ii)A company that does not comply with paragraph (a) and notify the Revenue Commissioners where this is a change in the position of the company impacting the entitlement of the company to hold the certificates of qualification will be liable to—
    1. (b)(ii)(I)a penalty of €4,000, in the case of the company, and
    2. (b)(ii)(II)a penalty of €3,000, in the case of the secretary of the company.

(4)(c)Where information comes to the attention of the Revenue Commissioners which causes the Revenue Commissioners to form the opinion that—

  1. (c)(i)there has been a change in a material fact relevant to the company satisfying any of the conditions contained within section 600F(2), or
  2. (c)(ii)any of the conditions contained within section 600F(2) were not satisfied at the date of application for the certificates of qualification, or the date on which the certificates of qualification were issued, or renewed,

then, the Revenue Commissioners will give notice in writing to the company of the intention to withdraw the certificates of qualification.

(4)(d)For the purposes of assessing whether a company should retain the certificates of qualification, the Revenue Commissioners may consult with Enterprise Ireland and take account of any such recommendations or report made by Enterprise Ireland to the Revenue Commissioners.

  1. (d)(i)For the purposes of assessing whether a company should retain the certificates of qualification, where additional information has come to the attention of the Revenue Commissioners, the Revenue Commissioners may consult with Enterprise Ireland.
  2. (d)(ii)Following the consultation of the Revenue Commissioners with Enterprise Ireland, Enterprise Ireland shall make any recommendations or report to the Revenue Commissioners for the purposes of assessing whether a company should retain the certificates of qualification. The Revenue Commissioners shall take the recommendations or report made into account when forming their opinion as to whether to withdraw the certificates of qualification.

(4)(e)Subsection (4)(e) provides that a notice under paragraph (c), which is the notice from the Revenue Commissioners to the company that the Revenue Commissioners intend to withdraw the certificates of qualification, shall state—

  1. (e)(i)the reasons for the intention to withdraw the certificates of qualification, and
  2. (e)(ii)that the company has 30 days to make submissions and to provide such information and explanations as are necessary to prove to the satisfaction of the Revenue Commissioners that the conditions specified in section 600F(2) will—
    1. (e)(ii)(I)continue to be satisfied where paragraph (c)(i) applies, (i.e. where there has been a change in the material facts relevant to whether the company satisfies the necessary conditions under section 600F(2), the company demonstrates it satisfies the necessary conditions under section 600F(2)), or
    2. (e)(ii)(II)were satisfied, where paragraph (c)(ii) applies (i.e. where there has been a change in the material facts relating to whether the company satisfied the necessary conditions under section 600F(2), the company demonstrates it satisfied the necessary conditions at the date of application for the certificates of qualification).

(4)(f)Following consideration of the company’s submissions and, having taken into account any further recommendations or report which Enterprise Ireland (who may in turn consult with a consultant in respect of this matter), may make to the Revenue Commissioners, the Revenue Commissioners continue to hold the opinion that the company should not hold certificates of qualification on the basis that the conditions in section 600F(2)—

  1. (f)(i)are not satisfied where paragraph (c)(i) applies (i.e. where there has been a change in the material facts relevant to whether the company satisfies the necessary conditions under section 600F(2), the company does not demonstrate it satisfies the necessary conditions under section 600F(2)), or
  2. (f)(ii)were not satisfied, where paragraph (c)(ii) applies (i.e. where there has been a change in the material facts relating to whether the company satisfied the necessary conditions under section 600F(2), the company does not demonstrate it satisfied the necessary conditions at the date of application for the certificates of qualification),

then the Revenue Commissioners will issue a determination withdrawing the certificates of qualification and set out the reasons for that determination.

(4)(g)A person who is not satisfied with a determination issued under paragraph (f) may appeal the determination to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of that determination.

(4)(h)A determination under paragraph (f) shall take effect and the certificates of qualification which are withdrawn shall cease to be valid where—

  1. (h)(i)no appeal against the determination is brought, the certificates will cease to be valid 30 days after the determination, or
  2. (h)(ii)where an appeal is brought and is unsuccessful, the certificates will cease to be valid on the date the appeal process is concluded.

Relevant Date: Finance Act 2024