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Taxes Consolidation Act, 1997 (Number 39 of 1997)

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1077F. Penalty for deliberately or carelessly making incorrect returns or failing to make certain returns, etc.

(1) In this section—

the Acts” means the Tax Acts, the Capital Gains Tax Acts, Parts 18A, 18B, 18C, 18D, Part 22A of this Act and the Finance (Local Property Tax) Act 2012;

carelessly” means failure to take reasonable care;

liability to tax” means a liability to the amount of the difference specified in subsection (3) or (5), as the case may be, arising from any matter referred to in subsection (2) or (4), as the case may be;

period” means a year of assessment, an accounting period, a return period as defined in section 530 or an income tax month as defined in section 983, as the context requires;

prompted qualifying disclosure”, in relation to a person, means a qualifying disclosure that has been made to the Revenue Commissioners or to a Revenue officer in the period between—

(a) the date on which the person is notified by a Revenue officer of the date on which an inquiry or investigation into any matter occasioning a liability to tax of that person will start, and

(b) the date that the inquiry or investigation starts;

qualifying disclosure”, in relation to a person, means—

(a) in relation to a penalty referred to in subsection (6), a disclosure that the Revenue Commissioners are satisfied is a disclosure of—

(i) complete information in relation to, and full particulars of, all matters occasioning a liability to tax that gives rise to a penalty referred to in subsection (6), and

(ii) full particulars of all matters occasioning any liability to tax or duty that gives rise to—

(I) a penalty referred to in section 116A(6) of the Value-Added Tax Consolidation Act 2010,

(II) a penalty referred to in section 134A(2) of the Stamp Duties Consolidation Act 1999, and

(III) the application of subsection (6) to the Capital Acquisitions Tax Consolidation Act 2003,

and

(b) in relation to a penalty referred to in subsections (7) and (8), as the case may be, a disclosure that the Revenue Commissioners are satisfied is a disclosure of complete information in relation to, and full particulars of, all matters occasioning a liability to tax that gives rise to a penalty referred to in subsection (7) or (8), as the case may be, for the relevant period under whichever of the Acts the disclosure relates to,

made in writing to the Revenue Commissioners or to a Revenue officer and signed by or on behalf of that person and that is accompanied by—

(A) a declaration, to the best of that person’s knowledge, information and belief, made in writing that all matters contained in the disclosure are correct and complete, and

(B) a payment of the tax and duty payable in respect of any matter contained in the disclosure and the interest on late payment of that tax and duty;

Revenue officer” means an officer of the Revenue Commissioners;

tax” means any income tax, corporation tax, capital gains tax, domicile levy, income levy, parking levy, residential zoned land tax, universal social charge or local property tax;

unprompted qualifying disclosure”, in relation to a person, means a qualifying disclosure that the Revenue Commissioners are satisfied has been voluntarily furnished to them—

(a) before an inquiry or investigation had been started by them or by a Revenue officer into any matter occasioning a liability to tax of that person, or

(b) where the person is notified by a Revenue officer of the date on which an inquiry or investigation into any matter occasioning a liability to tax of that person will start, before that notification.

(2) Where a person—

(a) delivers any incorrect return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29 where that return or statement contains—

(i) a deliberate understatement of—

(I) income, profits or gains, or

(II) income tax in respect of emoluments to which Chapter 4 of Part 42 relates,

or

(ii) a deliberately false or overstated claim in connection with any allowance, deduction, relief or credit,

(b) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction, relief or credit and does so deliberately,

(c) submits to the Revenue Commissioners, the Appeal Commissioners or a Revenue officer any incorrect accounts which contain a deliberate understatement of income, profits or gains or a deliberate overstatement of any claim in connection with any allowance, deduction, relief or credit, or

(d) carelessly but not deliberately—

(i) delivers any incorrect return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29,

(ii) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction, relief or credit, or

(iii) submits to the Revenue Commissioners, the Appeal Commissioners or a Revenue officer any incorrect accounts which contain an understatement of income, profits or gains or an overstatement of any claims in connection with any allowance, deduction, relief or credit,

then—

(A) in the case of paragraphs (a) to (c), that action shall be a deliberate default for the purposes of this section, and

(B) in the case of paragraph (d), that action shall be a careless default for the purposes of this section,

and the person shall be liable to a penalty.

(3) The penalty referred to in subsection (2) shall be the difference between—

(a) the amount of tax that would have been payable for the relevant periods or could have been claimed by the person concerned (including any amount deducted at source and not repayable) if that tax had been computed in accordance with the incorrect or false return, statement, declaration, claim or accounts as actually made or submitted by or on behalf of that person for those periods, and

(b) the amount of tax that would have been payable for the relevant periods by, or refundable to, the person concerned (including any amount deducted at source and not repayable) if that tax had been computed in accordance with the true and correct return, statement, declaration, claim or accounts that should have been made or submitted by or on behalf of that person for those periods,

and for the purposes of this subsection and subsection (5) references in those subsections to tax payable shall be construed without regard to the definition of “income tax payable” in section 3.

(4) Where a person—

(a) deliberately fails to comply, or

(b) carelessly (but not deliberately) fails to comply,

with a requirement to deliver a return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29, then, that failure to comply with a requirement shall—

(i) in the case of paragraph (a), be a deliberate default for the purposes of this section, and

(ii) in the case of paragraph (b), be a careless default for the purposes of this section,

and the person shall be liable to a penalty.

(5) In relation to any matter that would have been included in a return or statement referred to in subsection (4) if the return or statement had been delivered by a person and had been correct, the penalty referred to in subsection (4) shall be the difference between—

(a) the amount of tax (if any) paid by the person for the relevant periods (including any amount deducted at source and not repayable) before—

(i) unless subparagraph (ii) applies, the date of the notice in writing from the Revenue Commissioners to the person concerned of an inquiry or investigation by the Revenue Commissioners or a Revenue officer into the matter, or

(ii) where the Revenue Commissioners had announced publicly that they had started an inquiry or investigation into the matter, the date of that public announcement,

and

(b) the amount of tax which would have been payable for the relevant periods (including any amount deducted at source and not repayable) if the return or statement had been delivered by that person and the return or statement had been correct.

(6) (a) (i) Subject to subparagraphs (ii), (iii) and (iv), where a person is liable to a penalty under subsection (2) or (4), as the case may be, for a deliberate default, the penalty referred to in subsection (3) or (5), as the case may be, shall not be reduced.

(ii) Where subparagraph (i) applies and the person cooperated fully with any inquiry or investigation started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 75 per cent of the difference referred to in subsection (3) or (5), as the case may be (referred to in this subsection and subsections (7) and (8) as “the difference”).

(iii) Where subparagraph (ii) applies and the person made a prompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 50 per cent of the difference.

(iv) Where subparagraph (ii) applies and the person made an unprompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 10 per cent of the difference.

(b) (i) Subject to subparagraph (ii), where a second qualifying disclosure is made by a person within 5 years of such person’s first qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, for a deliberate default shall not be reduced.

(ii) Where subparagraph (i) applies and the person cooperated fully with any inquiry or investigation started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, then—

(I) where that person made a prompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 75 per cent of the difference, and

(II) where that person made an unprompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 55 per cent of the difference.

(c) Where a third or subsequent qualifying disclosure is made by a person within 5 years of such person’s second qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, for a deliberate default under subsection (2) or (4), as the case may be, shall not be reduced.

(7) (a) In this subsection and subsection (8), “significant consequences” means, where subsection (2) applies, the amount of the difference referred to in subsection (3) exceeds 15 per cent of the amount referred to in paragraph (b) of subsection (3) and, where subsection (4) applies, the amount of the difference referred to in subsection (5) exceeds 15 per cent of the amount referred to in paragraph (b) of subsection (5).

(b) (i) Subject to subparagraphs (ii), (iii) and (iv), where a person is liable to a penalty under subsection (2) or (4), as the case may be, for a careless default which has significant consequences, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 40 per cent of the difference.

(ii) Where subparagraph (i) applies and the person cooperated fully with any inquiry or investigation started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 30 per cent of the difference.

(iii) Where subparagraph (ii) applies and the person also made a prompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 20 per cent of the difference.

(iv) Where subparagraph (ii) applies and the person also made an unprompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 5 per cent of the difference.

(c) (i) Subject to subparagraph (ii), where a second qualifying disclosure is made by a person within 5 years of such person’s first qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, for a careless default with significant consequences shall be reduced to 40 per cent of the difference.

(ii) Where subparagraph (i) applies and the person cooperated fully with any inquiry or investigation started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, then—

(I) where that person made a prompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 30 per cent of the difference, and

(II) where that person made an unprompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 20 per cent of the difference.

(d) Where a third or subsequent qualifying disclosure is made by a person within 5 years of such person’s second qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, for a careless default with significant consequences shall be reduced to 40 per cent of the difference.

(8) (a) Subject to paragraphs (b), (c) and (d), where a person is liable to a penalty under subsection (2) or (4), as the case may be, for a careless default which does not have significant consequences, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 20 per cent of the difference.

(b) Where paragraph (a) applies and the person cooperated fully with any inquiry or investigation started by the Revenue Commissioners or by a Revenue officer into any matter occasioning a liability to tax of that person, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 15 per cent of the difference.

(c) Where paragraph (b) applies and the person also made a prompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 10 per cent of the difference.

(d) Where paragraph (b) applies and the person also made an unprompted qualifying disclosure, the penalty referred to in subsection (3) or (5), as the case may be, shall be reduced to 3 per cent of the difference.

(9) Where—

(a) the aggregate amount of—

(i) the liability to tax (within the meaning of subsection (1)),

(ii) the liability to tax (within the meaning of section 116A(1) of the Value-Added Tax Consolidation Act 2010),

(iii) the liability to duty (within the meaning of section 134A(15) of the Stamp Duties Consolidation Act 1999), and

(iv) the differences specified in subsections (5) and (5A), as appropriate, of section 58 of the Capital Acquisitions Tax Consolidation Act 2003,

does not exceed €6,000, and

(b) but for this subsection the penalty would be reduced in accordance with subsection (7) or (8) of this section, subsection (7) or (8) of section 116A of the Value-Added Tax Consolidation Act 2010 or subsection (5)(b) or (5A)(b) of section 134A of the Stamp Duties Consolidation Act 1999, as the case may be,

then, notwithstanding subsection (2) or (4), as the case may be, that person shall not be liable to a penalty.

(10) Where any person is liable to a penalty under subsection (2) so much of the difference specified in subsection (3) as is attributable to a technical adjustment or an innocent error shall not be liable to a penalty.

(11) Where a person deliberately or carelessly furnishes, gives, produces or makes any incorrect return, information, certificate, document, record, statement, particulars, account or declaration of a kind mentioned in any of the provisions specified in column 2 or 3 of Schedule 29, the person shall be liable to—

(a) a penalty of €3,000 where that person has acted carelessly, or

(b) a penalty of €5,000 where that person has acted deliberately.

(12) Where any return, statement, declaration or accounts referred to in subsection (2) was or were made or submitted by a person, neither deliberately nor carelessly, and it comes to that person’s notice that it was or they were incorrect, then, unless the error is remedied without unreasonable delay, the incorrect return, statement, declaration or accounts shall be treated for the purposes of this section as having been deliberately made or submitted by that person.

(13) Subject to section 1077D(2), proceedings or applications for the recovery of any penalty under this section shall not be out of time because they are commenced after the time allowed by section 1063.

(14) A disclosure in relation to a person shall not be a qualifying disclosure where—

(a) before the disclosure is made, a Revenue officer had started an inquiry or investigation into any matter contained in that disclosure and had contacted or notified that person, or a person representing that person, in this regard, or

(b) matters contained in the disclosure are matters—

(i) that have become known, or are about to become known, to the Revenue Commissioners through their own investigations or through an investigation conducted by a statutory body or agency,

(ii) that are within the scope of an inquiry being carried out wholly or partly in public, or

(iii) to which the person who made the disclosure is linked, or about to be linked, publicly.

(15) (a) The relevant period for the purposes of subsections (3) and (5) shall be, in relation to anything delivered, made or submitted in any period, that period, the next period and any preceding period.

(b) For the purposes of this subsection, the references in subsections (3) and (5) to the amount of tax payable shall not, in relation to anything done in connection with a partnership, include any tax not chargeable in the partnership name.

(16) For the purposes of this section, any returns or accounts submitted on behalf of a person shall be deemed to have been submitted by the person unless that person proves that they were submitted without that person’s consent or knowledge.

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Inserted by FA21 s75(1)(a).