116. Penalty for deliberately or carelessly making incorrect returns, etc.

Summary

This section prescribes penalties in regard to deliberately or carelessly furnishing incorrect returns and the use of false invoices or other false documents in connection with the tax. The amount of the penalty is reduced where the person liable co-operates fully with any Revenue investigation. Where a penalty is incurred by a body of persons such as a company or society, the secretary is liable to a separate penalty. Penalties are also prescribed for a person who avoids tax on importation of goods. The section also provides for the forfeiture of goods in certain circumstances.

Details

(1) Definitions are provided for the purposes of the section.

(1A) A person, who is liable for VAT, only as a result of being jointly and severally liable under section 108C, is not liable to pay any penalty in respect of that unpaid VAT.

(1B) A tax representative, who is liable for VAT, only as a result of being jointly and severally liable under section 109A, is not liable to pay any penalty in respect of that unpaid VAT.

(2) A person is liable to a penalty where he or she deliberately furnishes an incorrect return or makes an incorrect claim or declaration.

(3) A person is liable to a penalty where he or she deliberately fails to furnish a return.

(4) The penalty incurred for deliberately furnishing an incorrect return is set out in subsection (11) and the penalty incurred for deliberately failing to furnish a return is set out in subsection (12). A reduction in these penalties is provided for where the person who is liable cooperated fully with any investigation or inquiry conducted by Revenue.

(5) A person is liable to a penalty where he or she, carelessly but not deliberately, furnishes an incorrect return or makes an incorrect claim or declaration

(6) A person is liable to a penalty where he or she, carelessly but not deliberately, fails to furnish a return.

(7) The penalty incurred under subsection (5) is set out in subsection (11) and the penalty incurred under subsection (6) is set out in subsection (12). It also provides for a reduction in these penalties where the person liable co-operated fully with any investigation or inquiry conducted by Revenue.

(8) Prescribed penalties of €3,000 apply where a person carelessly, and of €5,000 apply where a person deliberately, produces, furnishes, gives, sends or otherwise makes use of, any incorrect invoice, registration number, credit note, debit note, receipt, account, voucher, bank statement, estimate, statement, information book, document or record.

(9) Where a person, neither deliberately nor carelessly, furnishes an incorrect return and subsequently discovers the error, then, unless the error is corrected without unreasonable delay, that return is treated as having been deliberately made or submitted by that person.

(10) The time limits set out in section 113 do not apply to proceedings for the recovery of any penalty under this section.

(11) The amount of the penalty incurred under subsections (2) and (5) is the difference between the tax paid or claimed on the basis of the incorrect return, claim or declaration furnished and the amount of tax properly payable or refundable.

(12) The amount of the penalty incurred under subsections (3) and (6) is the difference between the tax paid before the start of any inquiry or investigation by Revenue and the amount of tax properly payable.

(13) A reduction in the penalties incurred under subsections (4) and (5) is provided for where a second qualifying disclosure is made by a person within 5 years of such person’s first qualifying disclosure.

(14) The penalties incurred under subsections (2), (3) and (5) cannot be reduced where a third or subsequent qualifying disclosure is made by a person within 5 years of such person’s second qualifying disclosure

(15) A disclosure is not a qualifying disclosure in circumstances where Revenue have already started an inquiry or investigation into any matter contained in that disclosure or the matters contained in that disclosure are already known to the Revenue

(15A) With effect from 1 May 2017, a disclosure is not a qualifying disclosure in circumstances where

• the disclosure relates directly or indirectly to offshore tax defaults
• the disclosure relates to any other tax default in circumstances where the person has, before the date of the disclosure, certain offshore matters that are known or become known to Revenue and which are matters occasioning a liability to tax that gives rise to a penalty.

(16) Any return, claim or declaration submitted on behalf of a person is deemed to have been submitted by the person, unless that person proves that it was submitted without his or her consent or knowledge.

(17) If the person incurring penalties under subsection (2), (3), (5) or (6) is a body of persons – for example, a company – there is a separate penalty of €1,500 (€3,000 in the case of deliberate behaviour) on the secretary of the body.

(18) A penalty of €4,000 is prescribed where a person improperly procures the importation of goods without payment of tax in circumstances where tax is chargeable. The person must also pay to Revenue the amount of tax that should have been paid on the importation of the goods.

(19) A penalty of €4,000 is prescribed where a person uses an invalid VAT registration number to acquire goods from another Member State at the zero rate of VAT. The person must also pay to Revenue the amount of tax that should have been paid on the acquisition.

(20) Where tax on the supply of goods has been remitted or repaid on the basis that the goods have been or are to be exported and those goods are later found in the country, the goods will be liable to forfeiture and the person to whom the goods were supplied will be liable for the tax which was remitted or repaid.

(21) The forfeiture of goods is provided for in the following cases:

• zero–rated intra-Community supplies where the goods were not dispatched or transported outside the State;
• zero–rated intra-Community acquisitions due to the use of an incorrect registration number;
• the intra-Community acquisitions of new means of transport which are purchased in another Member State without payment of VAT on the basis that they are liable to VAT in the State, but are then not declared as new means of transport liable to VAT in the State;
• supplies by an accountable person who has not applied to be registered for VAT.

(22) The provisions of the Customs Acts relating to forfeiture and condemnation of goods apply to goods liable to forfeiture under subsections (20) or (21).

(23) A Revenue officer authorised under this subsection or a member of the Garda Síochána can make an arrest where there are reasonable grounds for suspecting that a criminal offence has been committed in relation to tax by a person who is not established in the State or by a person who is likely to leave the State.

Relevant Date: Finance Act 2020