Taxes Consolidation Act 1997

Type Act

Publication 1997-11-30

State In force

Source Irish Statute Book

articles 1104

(8) For the purposes of subsection (7), the date on which the relief shall be granted is the date on which a repayment of tax for giving effect to the relief was made or, if there was no such repayment, the date on which the inspector issued a notice to the claimant showing the amount of tax payable after giving effect to the relief.

505 Information. [FA84 s24(1) to (8)]

505.—(1) Where an event occurs by reason of which any relief given to an individual is to be withdrawn by virtue of section 493, 498 or 499, the individual shall within 60 days of coming to know of the event give a notice in writing to the inspector containing particulars of the event.

(2) Where an event occurs by reason of which any relief in respect of any shares in a company is to be withdrawn by virtue of section 495, 496, 499, 500, 501 or 502—

(a) the company, and

(b) any person connected with the company who has knowledge of that matter,

shall within 60 days of the event or, in the case of a person within paragraph (b), of that person coming to know of it, give a notice in writing to the inspector containing particulars of the event or payment.

(3) Where the inspector has reason to believe that a person has not given a notice which the person is required to give under subsection (1) or (2) in respect of any event, the inspector may by notice in writing require that person to furnish him or her within such time (not being less than 60 days) as may be specified in the notice with such information relating to the event as the inspector may reasonably require for the purposes of this Part.

(4) Where relief is claimed in respect of shares in a company and the inspector has reason to believe that it may not be due by reason of any arrangement or scheme mentioned in section 493(11), 495(10) or 502, the inspector may by notice in writing require any person concerned to furnish him or her within such time (not being less than 60 days) as may be specified in the notice with—

(a) a declaration in writing stating whether or not, according to the information which that person has or can reasonably obtain, any such arrangement or scheme exists or has existed, and

(b) such other information as the inspector may reasonably require for the purposes of the provision in question and as that person has or can reasonably obtain.

(5) References in subsection (4) to the person concerned are, in relation to sections 493(11) and 502, references to the claimant and, in relation to sections 495(10) and 502, references to the company and any person controlling the company.

(6) Where relief has been given in respect of shares in a company—

(a) any person who receives from the company any payment or asset which may constitute value received (by that person or another) for the purposes of section 499 or 501(5), and

(b) any person on whose behalf such a payment or asset is received,

shall, if so required by the inspector, state whether the payment or asset received by that person or on that person's behalf is received on behalf of any person other than that person and if so the name and address of that other person.

(7) Where relief has been claimed in respect of shares in a company, any person who holds or has held shares in the company and any person on whose behalf any such shares are or were held shall, if so required by the inspector, state whether the shares which are or were held by that person or on that person's behalf are or were held on behalf of any person other than that person and if so the name and address of that other person.

(8) No obligation as to secrecy imposed by statute or otherwise shall preclude the inspector from disclosing to a company that relief has been given or claimed in respect of a particular number or proportion of its shares.

506 Capital gains tax. [FA84 s25]

506.—(1) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares in respect of which any relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to the lesser of—

(a) the amount of that relief, and

(b) the excess;

but this subsection shall not apply to a disposal within section 1028(5).

(2) In relation to shares in respect of which relief has been given and not withdrawn, any question—

(a) as to which of any such shares issued to a person at different times a disposal relates, or

(b) whether a disposal relates to such shares or to other shares,

shall for the purposes of capital gains tax be determined as for the purposes of section 498.

(3) Where an individual holds ordinary shares in a company and the relief has been given in respect of some of the shares but not others, then, if there is a reorganisation (within the meaning of section 584) affecting those shares, section 584(3) shall apply separately to the shares in respect of which the relief has been given and to the other shares (so that the shares of each kind shall be treated as a separate holding of original shares and identified with a separate new holding).

(4) There shall be made all such adjustments of capital gains tax, whether by means of assessment or by means of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.

507 Application to subsidiaries. [FA84 s26; FA85 s13(d); FA91 s15(1)(f)]

507.—(1) A qualifying company may in the relevant period have one or more subsidiaries if—

(a) the conditions in subsection (2) are satisfied in respect of the subsidiary or each subsidiary and, except where provided in subsection (3), continue to be so satisfied until the end of the relevant period, and

(b) the subsidiary or each subsidiary is a company—

(i) within section 495(3)(a)(i), or

(ii) which exists solely for the purpose of carrying on any trade which consists solely of any one or more of the following trading operations—

(I) the purchase of goods or materials for use by the qualifying company or its subsidiaries,

(II) the sale of goods or materials produced by the qualifying company or its subsidiaries, or

(III) the rendering of services to or on behalf of the qualifying company or its subsidiaries.

(2) The conditions referred to in subsection (1)(a) are—

(a) that the subsidiary is a 51 per cent subsidiary of the qualifying company,

(b) that no other person has control of the subsidiary within the meaning of section 11, and

(c) that no arrangements are in existence by virtue of which the conditions in paragraphs (a) and (b) could cease to be satisfied.

(3) The conditions referred to in subsection (1)(a) shall not be regarded as ceasing to be satisfied by reason only of the fact that the subsidiary or the qualifying company is wound up or dissolved without winding up if—

(a) it is shown that the winding up or dissolution is for bona fide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and

(b) the net assets, if any, of the subsidiary or, as the case may be, the qualifying company are distributed to its members before the end of the relevant period or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

(4) Where a qualifying company has one or more subsidiaries in the relevant period, this Part shall apply subject to Schedule 10.

508 Nominees and designated funds. [FA84 s27 and FA85 s13(e)]

508.—(1) Shares subscribed for, issued to, held by or disposed of for an individual by a nominee shall be treated for the purposes of this Part as subscribed for, issued to, held by or disposed of by that individual.

(2) (a) Relief shall be given, and section 490(1) (a) shall not apply, in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund designated by the Revenue Commissioners for the purposes of this section (in this Part referred to as “the managers of a designated fund”) where the amount so subscribed forms part of the fund.

(b) Except where provided by paragraph (a), relief shall not be given in respect of an amount subscribed as nominee for an individual by a person or persons having the management of an investment fund where the amount so subscribed forms part of the fund.

(3) The Revenue Commissioners may, if they think fit, having regard to the facts of the particular case and after such consultation, if any, as may seem to them to be necessary with such person or body of persons as in their opinion may be of assistance to them, and subject to such conditions, if any, as they think proper to attach to the designation, designate an investment fund for the purposes of this Part.

(4) (a) The Revenue Commissioners may, by notice in writing given to the managers of a designated investment fund, withdraw the designation given for the purposes of this section to the fund in accordance with subsection (3) and, on the giving of the notice, the fund shall cease to be a designated fund as respects any subscriptions made after the date of the notice referred to in paragraph (b).

(b) Where the Revenue Commissioners withdraw the designation of any fund for the purposes of this section, notice of the withdrawal shall be published as soon as may be in Iris Oifigiúil.

(5) Where an individual claims relief in respect of eligible shares in a company which have been issued to the managers of a designated fund as nominee for the individual, section 503(2) shall apply as if it required—

(a) the certificate referred to in that section to be issued by the company to the managers, and

(b) the claim for relief to be accompanied by a certificate issued by the managers, in such form as the Revenue Commissioners may authorise, furnishing such information as the Revenue Commissioners may require and certifying that the managers hold certificates issued to them by the companies concerned, for the purposes of section 503(2) in respect of the holdings of eligible shares shown on the managers' certificate.

(6) The managers of a designated fund may be required by a notice given to them by an inspector or other officer of the Revenue Commissioners to deliver to the officer within the time limited by the notice a return of the holdings of eligible shares shown on certificates issued by them in accordance with subsection (5) in the year of assessment to which the return relates.

(7) Section 503(6) shall not apply in relation to any certificate issued by the managers of a designated fund for the purposes of subsection (5).

(8) Without prejudice to the generality of subsection (3), the Revenue Commissioners shall designate a fund for the purposes of this Part only if they are satisfied that—

(a) the fund is established under irrevocable trusts for the sole purpose of enabling individuals who qualify for the relief (in this subsection referred to as “qualifying individuals”) to invest in eligible shares of a qualifying company, and

(b) under the terms of the trusts it is provided that—

(i) the entire fund is to be invested without undue delay in eligible shares,

(ii) the fund is to subscribe only for shares which, subject to the circumstances of the qualifying individuals participating in the fund (in this subsection referred to as “participants”), qualify those participants for relief,

(iii) pending investment in eligible shares, any moneys subscribed for the purchase of shares are to be placed on deposit in a separate account with a bank licensed to transact business in the State,

(iv) any amounts received by means of dividends or interest are, subject to a commission in respect of management expenses at a rate not exceeding a rate which shall be specified in the deed of trust under which the fund has been established, to be paid without undue delay to the participants,

(v) any charges to be made by means of management or other expenses in connection with the establishment, the running, the winding down or the termination of the fund shall be at a rate not exceeding a rate which shall be specified in the deed of trust under which the fund is established,

(vi) audited accounts of the fund are submitted annually to the Revenue Commissioners as soon as may be after the end of each period for which accounts of the fund are made up,

(vii) the managers, the trustees of the fund and any of their associates are not for the time being connected either directly or indirectly with any company whose shares comprise part of the fund,

(viii) any discounts on eligible shares received by the trustees or managers of the fund are accepted solely for the benefit of the participants,

(ix) the fund is a closed fund and the closing date for participation precedes the making of the first investment,

(x) if a limit is placed on the size of the fund or a minimum amount for investment is stipulated, any subscriptions not accepted are to be returned without undue delay, and

(xi) no participant is allowed to have any shares in any company in which the fund has invested transferred into his or her name until 5 years have elapsed from the date of the issue of the shares to the fund.

509 Interpretation (Chapter 1). [FA82 s50]

509.—(1) In this Chapter and in Schedule 11—

“the appropriate percentage”, in relation to any shares, shall be construed in accordance with section 511(3);

“approved scheme” shall be construed in accordance with section 510(1);

“the company concerned” has the meaning assigned to it by paragraph 3(1) of Schedule 11;

“group scheme” and, in relation to such a scheme, “participating company” have the meanings respectively assigned to them by paragraph 3(2) of Schedule 11;

“initial market value”, in relation to any shares, shall be construed in accordance with section 510(2);

“locked-in value”, in relation to any shares, shall be construed in accordance with section 512(1);

“market value”, in relation to any shares, shall be construed in accordance with section 548;

“participant” shall be construed in accordance with section 510(1)(a);

“the period of retention” has the meaning assigned to it by section 511(1)(a);

“the release date” has the meaning assigned to it by section 511(2);

“shares” includes stock;

“the trust instrument”, in relation to an approved scheme, means the instrument referred to in paragraph 3(3)(c) of Schedule 11;

“the trustees”, in relation to an approved scheme or a participant's shares, means the body of persons for the establishment of which the scheme shall provide as mentioned in paragraph 3(3) of Schedule 11.

(2) Any provision of this Chapter with respect to—

(a) the order in which any of a participant's shares are to be treated as disposed of for the purposes of this Chapter, or

(b) the shares in relation to which an event is to be treated as occurring for any such purpose,

shall apply notwithstanding any direction given to the trustees with respect to shares of a particular description or to shares appropriated to the participant at a particular time.

(3) For the purposes of capital gains tax—

(a) no deduction shall be made from the consideration for the disposal of any shares by reason only that an amount determined under this Chapter is chargeable to income tax,

(b) any charge to income tax by virtue of section 513 shall be disregarded in determining whether a distribution is a capital distribution within the meaning of section 583, and

(c) nothing in any provision referred to in subsection (2) shall affect the rules applicable to the computation of a gain accruing on a part disposal of a holding of shares or other securities which were acquired at different times.

510.—(1) In this Chapter, references to an approved scheme are references to a scheme approved of as is mentioned in subsection (3) and, in relation to such a scheme—

(a) any reference to a participant is a reference to an individual to whom the trustees of the scheme have appropriated shares, and

(b) subject to section 514, any reference to a participant's shares is a reference to the shares which have been appropriated to the participant by the trustees of an approved scheme.

(2) Any reference in this Chapter to the initial market value of any of a participant's shares is a reference to the market value of those shares determined—

(a) except where paragraph (b) applies, on the date on which the shares were appropriated to the participant, and

(b) if the Revenue Commissioners and the trustees of the scheme agree in writing, on or by reference to such earlier date or dates as may be provided for in the agreement.

(3) This section shall apply where the trustees of a profit sharing scheme approved of in accordance with Part 2 of Schedule 11 appropriate shares—

(a) which have previously been acquired by the trustees, and

(b) as to which the conditions in Part 3 of that Schedule are fulfilled,

to an individual who participates in the scheme.

(4) Notwithstanding anything in the Income Tax Acts, a charge to tax shall not be made on any individual in respect of the receipt of a right to receive the beneficial interest in shares passing or to be passed to that individual by virtue of such an appropriation of shares as is mentioned in subsection (3).

(5) Notwithstanding anything in the approved scheme concerned or in the trust instrument or in section 511, for the purposes of capital gains tax a participant shall be treated as absolutely entitled to his or her shares as against the trustees.

(6) Where the trustees of an approved scheme acquire any shares as to which the conditions in Part 3 of Schedule 11 are fulfilled and, within the period of 18 months beginning with the date of their acquisition, those shares are appropriated in accordance with the scheme—

(a) section 805 shall not apply to income consisting of dividends on those shares received by the trustees, and

(b) any gain accruing to the trustees on the appropriation of those shares shall not be a chargeable gain,

and, for the purpose of determining whether any shares are appropriated within that period of 18 months, shares which were acquired at an earlier time shall be taken to be appropriated before shares of the same class which were acquired at a later time.

(7) The Revenue Commissioners may by notice in writing require any person to furnish to them, within such time as they may direct (but not being less than 30 days), such information as they think necessary for the purposes of their functions under this Chapter, including in particular information to enable them—

(a) to determine whether to approve of a scheme or withdraw an approval already given, and

(b) to determine the liability to tax, including capital gains tax, of any participant in an approved scheme.

511 The period of retention, release date and appropriate percentage. [FA82 s52; FA86 s11; FA97 s50(a)]

511.—(1) (a) In this Chapter, “the period of retention”, in relation to any of a participant's shares, means the period beginning on the date on which those shares are appropriated to the participant and ending on the second anniversary of that date or, if it is earlier—

(i) the date on which the participant ceases to be an employee or director of a relevant company by reason of injury or disability or on account of his or her being dismissed by reason of redundancy (within the meaning of the Redundancy Payments Acts, 1967 to 1991),

(ii) the date on which the participant reaches pensionable age (within the meaning of section 2 of the Social Welfare (Consolidation) Act, 1993), or

(iii) the date of the participant's death.

(b) In paragraph (a), “relevant company” means the company concerned or, if the scheme in question is a group scheme, a participating company and, in the application of paragraph (a) to a participant in a group scheme, the participant shall not be treated as ceasing to be an employee or director of a relevant company until such time as he or she is no longer an employee or director of any of the participating companies.

(2) In this Chapter, “the release date”, in relation to any of a participant's shares, means—

(a) as on and from the 10th day of May, 1997, the third anniversary of the date on which the shares were appropriated to the participant, and

(b) before the 10th day of May, 1997, the fifth anniversary of the date on which the shares were appropriated to the participant.

(3) Subject to section 515(4), for the purposes of the provisions of this Chapter charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of the individual's shares, any reference to the appropriate percentage in relation to those shares shall be determined according to the time of that event, as follows—

(a) as respects such an occurrence as on and from the 10th day of May, 1997—

(i) if the event occurs before the third anniversary of the date on which the shares were appropriated to the participant and subparagraph (ii) does not apply, the appropriate percentage shall be 100 per cent, and

(ii) if, in a case where at the time of the event the participant—

(I) has ceased to be an employee or director of a relevant company as mentioned in subsection (1)(a)(i), or

(II) has reached pensionable age (within the meaning of section 2 of the Social Welfare (Consolidation) Act, 1993),

the event occurs before the third anniversary of the date on which the shares were appropriated to the participant, the appropriate percentage shall be 50 per cent, and

(b) as respects such an occurrence before the 10th day of May, 1997—

(i) if the event occurs before the fourth anniversary of the date on which the shares were appropriated to the participant and subparagraph (iii) does not apply, the appropriate percentage shall be 100 per cent,

(ii) if the event occurs on or after the fourth anniversary and before the fifth anniversary of the date on which the shares were appropriated to the participant and subparagraph (iii) does not apply, the appropriate percentage shall be 75 per cent, and

(iii) if, in a case where at the time of the event the participant—

(I) has ceased to be an employee or director of a relevant company as mentioned in subsection (1)(a)(i), or

(II) has reached pensionable age (within the meaning of section 2 of the Social Welfare (Consolidation) Act, 1993),

the event occurs before the fifth anniversary of the date on which the shares were appropriated to the participant, the appropriate percentage shall be 50 per cent.

(4) No scheme shall be approved of as is mentioned in section 510(3) unless the Revenue Commissioners are satisfied that, whether under the terms of the scheme or otherwise, every participant in the scheme is bound in contract with the company concerned—

(a) to permit his or her shares to remain in the hands of the trustees throughout the period of retention,

(b) not to assign, charge or otherwise dispose of his or her beneficial interest in his or her shares during that period,

(c) if he or she directs the trustees to transfer the ownership of his or her shares to him or her at any time before the release date, to pay to the trustees before the transfer takes place a sum equal to income tax at the standard rate on the appropriate percentage of the locked-in value of the shares at the time of the direction, and

(d) not to direct the trustees to dispose of his or her shares at any time before the release date in any other way except by sale for the best consideration in money that can reasonably be obtained at the time of the sale.

(5) No obligation placed on the participant by virtue of subsection (4)(c) shall be construed as binding his or her personal representatives to pay any sum to the trustees.

(6) Any obligation imposed on a participant by virtue of subsection (4) shall not prevent the participant from—

(a) directing the trustees to accept an offer for any of his or her shares (in this paragraph referred to as “the original shares”) if the acceptance or agreement will result in a new holding (within the meaning of section 584) being equated with the original shares for the purposes of capital gains tax,

(b) directing the trustees to agree to a transaction affecting his or her shares or such of those shares as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting—

(i) all the ordinary share capital of the company in question or, as the case may be, all the shares of the class in question, or

(ii) all the shares, or shares of the class in question, held by a class of shareholders identified otherwise than by reference to their employment or their participation in an approved scheme,

(c) directing the trustees to accept an offer of cash, with or without other assets, for his or her shares if the offer forms part of a general offer made to holders of shares of the same class as his or her shares or of shares in the same company and made in the first instance on a condition such that if it is satisfied the person making the offer will have control (within the meaning of section 11) of that company, or

(d) agreeing, after the expiry of the period of retention, to sell the beneficial interest in his or her shares to the trustees for the same consideration as in accordance with subsection (4)(d) would be required to be obtained for the shares themselves.

(7) If in breach of his or her obligation under subsection (4)(b) a participant assigns, charges or otherwise disposes of the beneficial interest in any of his or her shares, the participant shall as respects those shares be treated for the purposes of this Chapter as if, at the time they were appropriated to him or her, he or she was ineligible to participate in the scheme, and section 515 shall apply accordingly.

512 Disposals of scheme shares. [FA82 s53]

512.—(1) Subject to sections 514 and 515(6), any reference in this Chapter to the locked-in value of any of a participant's shares at any time shall be construed as follows:

(a) if before that time the participant has become chargeable to income tax by virtue of section 513 on a percentage of the amount or value of any capital receipt (within the meaning of that section) which is referable to those shares, the locked-in value of the shares shall be the amount by which their initial market value exceeds the amount or value of that capital receipt or, if there has been more than one such receipt, the aggregate of those receipts, and

(b) in any other case, the locked-in value of the shares shall be their initial market value.

(2) Where the trustees dispose of any of a participant's shares at any time before the release date or, if it is earlier, the date of the participant's death, the participant shall, subject to subsections (3) and (4), be chargeable to income tax under Schedule E for the year of assessment in which the disposal takes place on the appropriate percentage of the locked-in value of the shares at the time of the disposal.

(3) Subject to subsection (4), if on a disposal of shares within subsection (2) the proceeds of the disposal are less than the locked-in value of the shares at the time of the disposal, subsection (2) shall apply as if that locked-in value were reduced to an amount equal to the proceeds of the disposal.

(4) Where at any time before the disposal of any of a participant's shares a payment was made to the trustees to enable them to exercise rights arising under a rights issue, subsections (2) and (3) shall, subject to subsection (5)(b), apply as if the proceeds of the disposal were reduced by an amount equal to that proportion of that payment or, if there was more than one such payment, of the aggregate of those payments which, immediately before the disposal, the market value of the shares disposed of bore to the market value of all the participant's shares held by the trustees at that time.

(5) (a) In this subsection, “shares”, in relation to shares allotted or to be allotted on a rights issue, includes securities and rights of any description.

(b) For the purposes of subsection (4)—

(i) no account shall be taken of any payment to the trustees if or to the extent that it consists of the proceeds of a disposal of rights arising under a rights issue, and

(ii) in relation to a particular disposal, the amount of the payment or, as the case may be, of the aggregate of the payments referred to in that subsection shall be taken to be reduced by an amount equal to the total of the reduction (if any) previously made under that subsection in relation to earlier disposals,

and any reference in subsection (4) or subparagraph (i) to the rights arising under a rights issue is a reference to rights conferred in respect of a participant's shares, being rights to be allotted, on payment, other shares in the same company.

(6) Where the disposal referred to in subsection (2) is made from a holding of shares appropriated to the participant at different times, then, in determining for the purposes of this Chapter—

(a) the initial market value and the locked-in value of each of those shares, and

(b) the percentage which is the appropriate percentage in relation to each of those shares,

the disposal shall be treated as being of shares appropriated earlier before those appropriated later.

(7) Where at any time the participant's beneficial interest in any of his or her shares is disposed of, the shares in question shall be treated for the purposes of this Chapter as having been disposed of at that time by the trustees for (subject to subsection (8)) the like consideration as was obtained for the disposal of the beneficial interest, and for the purpose of this subsection there shall be no disposal of the participant's beneficial interest if and at the time when that interest becomes vested in any person on the insolvency of the participant or otherwise by operation of the law of the State.

(8) Where—

(a) a disposal of shares within subsection (2) is a transfer to which section 511(4)(c) applies,

(b) the Revenue Commissioners are of the opinion that any other disposal within that subsection is not at arm's length and accordingly direct that this subsection shall apply, or

(c) a disposal of shares within that subsection is one which is treated as taking place by virtue of subsection (7) and takes place within the period of retention,

the proceeds of the disposal for the purposes of this Chapter shall be taken to be equal to the market value of the shares at the time of the disposal.

513 Capital receipts in respect of scheme shares. [FA82 s54]

513.—(1) Subject to this section, where, in respect of or by reference to any of a participant's shares, the trustees become or the participant becomes entitled, before the release date, to receive any money or money's worth (in this section referred to as a “capital receipt”), the participant shall be chargeable to income tax under Schedule E for the year of assessment in which the entitlement arises on the appropriate percentage (determined as at the time when the trustees become or the participant becomes so entitled) of the amount or value of the receipt.

(2) Money or money's worth shall not be a capital receipt for the purposes of this section if or, as the case may be, to the extent that—

(a) it constitutes income in the hands of the recipient for the purposes of income tax,

(b) it consists of the proceeds of a disposal within section 512, or

(3) Where, pursuant to a direction given by or on behalf of the participant or any person in whom the beneficial interest in the participant's shares is for the time being vested, the trustees—

(a) dispose of some of the rights arising under a rights issue within the meaning of section 512(5)(b), and

(b) use the proceeds of that disposal to exercise other such rights,

the money or money's worth which constitutes the proceeds of that disposal shall not be a capital receipt for the purposes of this section.

(4) Where apart from this subsection the amount or value of a capital receipt would exceed the sum which, immediately before the entitlement to the receipt arose, was the locked-in value of the shares to which the receipt is referable, subsection (1) shall apply as if the amount or value of the receipt were equal to that locked-in value.

(5) Subsection (1) shall not apply in relation to a receipt if the entitlement to it arises after the death of the participant to whose shares it is referable.

(6) Subsection (1) shall not apply in relation to any receipt the amount or value of which (after any reduction under subsection (4)) does not exceed £10.

514 Company reconstructions, amalgamations, etc. [FA82 s55]

514.—(1) In this section—

“new shares” means shares comprised in the new holding which were issued in respect of, or otherwise represent, shares comprised in the original holding;

“the corresponding shares”, in relation to any new shares, means those shares in respect of which the new shares were issued or which the new shares otherwise represent.

(2) This section shall apply where there occurs in relation to any of a participant's shares (in this section referred to as “the original holding”) a transaction (in this section referred to as a “company reconstruction”) which results in a new holding (within the meaning of section 584) being equated with the original holding for the purposes of capital gains tax.

(3) (a) Where shares are issued as part of a company reconstruction in circumstances such that section 131(2) applies, those shares shall be treated for the purposes of this section as not forming part of the new holding.

(b) Nothing in this Chapter shall affect the application of section 130(2)(c) or 132(2).

(4) Subject to this section, references in this Chapter to a participant's shares shall be construed, after the time of the company reconstruction, as being or, as the case may be, as including, references to any new shares, and for the purposes of this Chapter—

(a) a company reconstruction shall be treated as not involving a disposal of shares comprised in the original holding,

(b) the date on which any new shares are to be treated as having been appropriated to the participant shall be the date on which the corresponding shares were appropriated, and

(c) the conditions in Part 3 of Schedule 11 shall be treated as fulfilled with respect to any new shares if those conditions were (or were treated as) fulfilled with respect to the corresponding shares.

(5) In relation to shares comprised in the new holding, section 512(1) shall apply as if the references in that section to the initial market value of the shares were references to their locked-in value immediately after the company reconstruction, which shall be determined by—

(a) ascertaining the aggregate amount of locked-in value immediately before the reconstruction of those shares comprised in the original holding which had at that time the same locked-in value, and

(b) distributing that amount proportionately among—

(i) such of those shares as remain in the new holding, and

(ii) any new shares in relation to which those shares are the corresponding shares,

according to their market value immediately after the date of the reconstruction, and section 512(1)(a) shall apply only to capital receipts after the date of the reconstruction.

(6) For the purposes of this Chapter, where as part of a company reconstruction the trustees become entitled to a capital receipt (within the meaning of section 513), their entitlement to the capital receipt shall be taken to arise before the new holding comes into being and, for the purposes of subsection (5), before the date on which the locked-in value of any shares comprised in the original holding falls to be ascertained.

(7) In relation to a new holding, any reference in this section to shares includes securities and rights of any description which form part of the new holding for the purposes of section 584.

515 Excess or unauthorised shares. [FA82 s56; FA95 s16]

515.—(1) Where the total of the initial market values of all the shares appropriated to an individual in any one year of assessment (whether under a single approved scheme or under 2 or more such schemes) exceeds £10,000, subsections (4) to (7) shall apply to any excess shares, that is, any share which caused that limit to be exceeded and any share appropriated after that limit was exceeded.

(2) For the purposes of subsection (1), where a number of shares is appropriated to an individual at the same time under 2 or more approved schemes, the same proportion of the shares appropriated at that time under each scheme shall be regarded as being appropriated before the limit of £10,000 is exceeded.

(3) Where the trustees of an approved scheme appropriate shares to an individual at a time when the individual is ineligible to participate in the scheme by virtue of Part 4 of Schedule 11, subsections (4) to (7) shall apply in relation to those shares, and in those subsections those shares are referred to as “unauthorised shares”.

(4) For the purposes of any provision of this Chapter charging an individual to income tax under Schedule E by reason of the occurrence of an event relating to any of the individual's shares—

(a) the appropriate percentage in relation to excess shares or unauthorised shares shall in every case be 100 per cent, and

(b) without prejudice to section 512(6), the event shall be treated as relating to shares which are not excess shares or unauthorised shares before shares which are.

(5) Excess shares or unauthorised shares which have not been disposed of before the release date, or if it is earlier, the date of the death of the participant whose shares they are, shall be treated for the purposes of this Chapter as having been disposed of by the trustees immediately before the release date or, as the case may require, the date of the participant's death, for a consideration equal to their market value at that time.

(6) The locked-in value at any time of any excess shares or unauthorised shares shall be their market value at that time.

(7) Where there has been a company reconstruction to which section 514 applies, a new share (within the meaning of that section) shall be treated as an excess share or unauthorised share if the corresponding share (within the meaning of that section) or, if there was more than one corresponding share, each of them was an excess share or an unauthorised share.

516 Assessment of trustees in respect of sums received. [FA82 s57]

516.—Where in connection with a direction to transfer the ownership of a participant's shares to which paragraph (c) of section 511(4) applies the trustees receive such a sum as is referred to in that paragraph—

(a) the trustees shall be chargeable to income tax under Case IV of Schedule D on an amount equal to the appropriate percentage of the locked-in value of the shares at the time of the direction, and

(b) the amount on which the participant is to be charged to income tax as a result of the transfer shall be deemed to be an amount from which income tax has been deducted at the standard rate pursuant to section 238.

517.—(1) Subject to subsections (3) and (4), as respects any accounting period, any sum expended in that accounting period by the company concerned or, in the case of a group scheme, by a participating company in making a payment or payments to the trustees of an approved scheme shall be included—

(a) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains for that accounting period of a trade carried on by that company, or

(b) if that company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for that accounting period for the purposes of corporation tax,

only if one of the conditions in subsection (2)(b) is fulfilled.

(2) (a) In this subsection, “the relevant period” means the period of 9 months beginning on the day following the end of the period of account in which the sum mentioned in subsection (1) is charged as an expense of the company incurring the expenditure or such longer period as the Revenue Commissioners may allow by notice in writing given to that company.

(b) The conditions referred to in subsection (1) are—

(i) that before the expiry of the relevant period the sum mentioned in subsection (1) is applied by the trustees in the acquisition of shares for appropriation to individuals who are eligible to participate in the scheme by virtue of their being or having been employees or directors of the company making the payment, and

(ii) that the sum is necessary to meet the reasonable expenses of the trustees in administering the scheme.

(3) (a) In this subsection, “trading income”, in relating to any trade, means the income from the trade computed in accordance with the rules applicable to Case I of Schedule D before any deduction under this Chapter and after any set-off or reduction of income by virtue of section 396 or 397, and after any deduction or addition by virtue of section 307 or 308, and after any deduction by virtue of section 666.

(b) No deduction shall be allowed under this section or under any other provision of the Tax Acts in respect of so much of any sum or the aggregate amount of any sums expended by a participating company in an accounting period in the manner referred to in subsection (1) as exceeds the company's—

(i) trading income for that accounting period, in the case of a company to which paragraph (a) of that subsection applies, or

(ii) income for that accounting period, in the case of a company to which paragraph (b) of that subsection applies, after taking into account any sums which apart from this section are to be deducted under section 83(2) as expenses of management in computing the profits of the company for the purposes of corporation tax.

(4) The deduction to be allowed under this section or under any other provision of the Tax Acts in respect of any sum or the aggregate amount of any sums expended by a participating company in an accounting period in the manner referred to in subsection (1) shall not exceed such sum as is in the opinion of the Revenue Commissioners reasonable, having regard to the number of employees or directors of the company making the payment who have agreed to participate in the scheme, the services rendered by them to that company, the levels of their remuneration, the length of their service or similar factors.

(5) For the purposes of this section, the trustees of an approved scheme shall be taken to apply sums paid to them in the order in which the sums are received by them.

518.—(1) This section shall apply to a sum expended on or after the 10th day of May, 1997, by a company in establishing a profit sharing scheme which the Revenue Commissioners approve of in accordance with Part 2 of Schedule 11 and under which the trustees acquire no shares before such approval is given.

(2) A sum to which this section applies shall be included—

(a) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company, or

(b) if the company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for the purposes of corporation tax.

(3) In a case where—

(a) subsection (2) applies, and

(b) the approval is given after the end of the period of 9 months beginning on the day following the end of the accounting period in which the sum is expended,

then, for the purpose of subsection (2), the sum shall be treated as expended in the accounting period in which the approval is given and not in the accounting period mentioned in paragraph (b).

519.—(1) (a) This section shall apply to an employee share ownership trust which the Revenue Commissioners have approved of as a qualifying employee share ownership trust in accordance with Schedule 12 and which approval has not been withdrawn.

(b) This section shall be construed together with Schedule 12.

(2) Where, in an accounting period of a company, the company expends a sum—

(a) in establishing a trust to which this section applies, or

(b) in making a payment by means of contribution to the trustees of a trust which at the time the sum is expended is a trust to which this section applies, and—

(i) at that time the company or a company which it then controls has employees who are eligible to benefit under the terms of the trust deed, and

(ii) before the expiry of the expenditure period the sum is expended by the trustees for one or more of the qualifying purposes,

then, the sum shall be included—

(I) in the sums to be deducted in computing for the purposes of Schedule D the profits or gains for the accounting period of a trade carried on by that company, or

(II) if the company is an investment company within the meaning of section 83 or a company in the case of which that section applies by virtue of section 707, in the sums to be deducted under section 83(2) as expenses of management in computing the profits of the company for that accounting period for the purposes of corporation tax.

(3) Where—

(a) subsection (2) (a) applies, and

(b) the trust is established after the end of the period of 9 months beginning on the day following the end of the accounting period in which the sum is expended by the company,

then, for the purposes of subsection (2), the sum shall be treated as expended in the accounting period in which the trust is established and not in the accounting period mentioned in paragraph (b).

(4) For the purposes of subsection (2)(b)(i), the question whether one company is controlled by another shall be construed in accordance with section 432.

(5) For the purposes of subsection (2)(b)(ii)—

(a) each of the following shall be a qualifying purpose—

(i) the acquisition of shares in the company which established the trust,

(ii) the repayment of sums borrowed,

(iii) the payment of interest on sums borrowed,

(iv) the payment of any sum to a person who is a beneficiary under the terms of the trust deed, and

(v) the meeting of expenses,

and

(b) the expenditure period shall be the period of 9 months beginning on the day following the end of the accounting period in which the sum is expended by the company or such longer period as the Revenue Commissioners may allow by notice given to the company.

(6) For the purposes of this section, the trustees of an employee share ownership trust shall be taken to expend sums paid to them in the order in which the sums are received by them, irrespective of the number of companies making payments.

(7) Section 805 shall not apply to income consisting of dividends in respect of securities held by a trust to which this section applies.

(8) Where the trustees of a trust to which this section applies transfer securities to the trustees of a profit sharing scheme approved under Part 2 of Schedule 11, any gain accruing to those first-mentioned trustees on that transfer shall not be a chargeable gain.

(9) Notwithstanding anything in subsections (1) to (8), where the Revenue Commissioners in accordance with Schedule 12 withdraw approval of an employee share ownership trust as a qualifying employee share ownership trust, then, as on and from the date from which that withdrawal has effect, this section shall not apply in relation to—

(a) any sum expended by a company in making a payment to that trust,

(b) income consisting of dividends in respect of securities held by that trust, or

PART 18 Payments in Respect of Professional Services by Certain Persons and Payments to Subcontractors in Certain Industries

CHAPTER 1 Payments in respect of professional services by certain persons

520 Interpretation (Chapter 1). [FA87 s13; FA88 s8(a)(i) and (ii); FA92 s10]

520.—(1) In this Chapter—

“accountable person” has the meaning assigned to it by section 521;

“appropriate tax”, in relation to a relevant payment, means—

(a) where such payment does not include value-added tax, a sum representing income tax on the amount of that payment at the standard rate in force at the time of payment, and

(b) where such payment includes value-added tax, a sum representing income tax at the standard rate in force at the time of payment on the amount of that payment exclusive of the value-added tax;

“authorised insurer” has the same meaning as in section 470;

“basis period for a year of assessment”, in relation to a specified person, means—

(a) where a relevant payment is to be included in a computation of profits or gains of that person for the purposes of Case I or II of Schedule D, the period on the profits or gains of which income tax for that year is to be finally computed for the purposes of Case I or II of Schedule D, and—

(i) where 2 basis periods overlap, the period common to both shall be deemed for the purposes of this Chapter to fall in the second basis period only,

(ii) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, the interval shall be deemed to be part of the second basis period, and

(iii) the reference in subparagraph (i) to the overlapping of 2 periods shall be construed as including a reference to the coincidence of 2 periods or to the inclusion of one period in another, and the reference to the period common to both shall be construed accordingly,

and

(b) in any other case, the year of assessment;

“contract of insurance” means a contract between an authorised insurer and a subscriber in respect of such insurance as is referred to in the definition of “relevant contract” in section 470(1);

“income tax month” means a month beginning on the 6th day of any of the months of April to March in any year;

“member”, in relation to a contract of insurance, means a person who is named in the relevant policy of insurance and who has been accepted for insurance by an authorised insurer;

“practitioner” has the same meaning as in section 469;

“professional services” includes—

(a) services of a medical, dental, pharmaceutical, optical, aural or veterinary nature,

(b) services of an architectural, engineering, quantity surveying or surveying nature, and related services,

(c) services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies,

(d) services of a solicitor or barrister and other legal services,

(e) geological services, and

(f) training services provided on behalf of An Foras Áiseanna Saothair;

“relevant medical expenses” means expenses incurred in respect of professional services provided by a practitioner, being expenses that are or may become the subject of a claim for their reimbursement or discharge in whole or in part under a contract of insurance but not including any such expenses that—

(a) under the terms of the contract of insurance may (except in the case of certain expenses that in the opinion of the authorised insurer concerned are unusually large) be the subject of a claim for their discharge or reimbursement only—

(i) after the expiry of a stated period of 12 months in which the expenses are incurred, and

(ii) to the extent that the aggregate of the expenses and any other expenses incurred in that period exceeds a stated amount,

(b) are incurred in respect of professional services provided by a practitioner outside the State;

“relevant payment” means a payment made by—

(a) an accountable person in respect of professional services whether or not such services are provided to the accountable person making the payment, or

(b) an authorised insurer to a practitioner in accordance with section 522, or otherwise, in the discharge of a claim in respect of relevant medical expenses under a contract of insurance,

but excludes—

(i) emoluments within the scope of Chapter 4 of Part 42 to which that Chapter applies, and

(ii) payments under a relevant contract (within the meaning of section 530) from which tax has been deducted in accordance with subsection (1) of section 531, or would have been so deducted but for subsection (12) of that section;

“specified person”, in relation to a relevant payment, means the person to whom that payment is made;

“subscriber”, in relation to a contract of insurance, means a person (other than an authorised insurer) who is a party to the contract and in whose name the relevant policy of insurance is registered.

(2) For the purposes of this Chapter—

(a) any reference in this Chapter to the amount of a relevant payment shall be construed as a reference to the amount which would be the amount of that payment if no appropriate tax were to be deducted from that payment, and

(b) in relation to a specified person, appropriate tax referable to—

(i) an accounting period, or

(ii) a basis period for a year of assessment,

means the appropriate tax deducted from a relevant payment which is taken into account in computing the specified person's profits or gains for that period and where there is more than one such relevant payment in that period the aggregate of the appropriate tax deducted from such payments.

521 Accountable persons. [FA87 s14; FA92 s11(1)]

521.—(1) In this Chapter, “accountable person” means, subject to subsection (2), a person specified in Schedule 13.

(2) Where any of the persons specified in Schedule 13 is a body corporate, “accountable person” includes any subsidiary of that body corporate where such subsidiary is resident in the State and, for the purposes of this subsection, “subsidiary” has the meaning assigned to it by section 155 of the Companies Act, 1963.

(3) For the purposes of this Chapter, the Minister for Finance may by regulations extend or restrict the meaning of “accountable person” by adding or deleting one or more persons to or from, as the case may be, the list of persons specified in Schedule 13.

(4) Where regulations are proposed to be made under subsection (3), a draft of the regulations shall be laid before Dáil Éireann and the regulations shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

522 Obligation on authorised insurers. [FA87 s14A; FA88 s 8(c)]

522.—Subject to section 523(1), where under a contract of insurance a claim is made to an authorised insurer in respect of relevant medical expenses—

(a) the insurer shall discharge the claim by making payment to the extent of the amount of the benefit, if any, due under the contract, to the practitioner who provided the professional services to the subscriber or member concerned to whom the relevant medical expenses relate, and

(b) the subscriber or member, as the case may be, shall be acquitted and discharged of such amount as is represented by the payment as if the subscriber or member had made such payment.

523 Deduction of tax from relevant payments. [FA87 s15; FA88 s8(d)]

523.—(1) (a) An accountable person making a relevant payment shall deduct from the amount of the payment the appropriate tax in relation to the payment.

(b) The specified person to whom the amount is payable shall allow such deduction on receipt of the residue of the payment.

(c) The accountable person making the deduction and, if the accountable person is an authorised insurer, any subscriber or member on whose behalf the accountable person is making the relevant payment shall be acquitted and discharged of such amount as is represented by the deduction, as if the amount had actually been paid.

(2) Where—

(a) in accordance with section 522, a relevant payment has been made to a practitioner by an authorised insurer, and

(b) in accordance with subsection (1), the practitioner has allowed a deduction of appropriate tax in respect of that payment and a subscriber or member has been acquitted and discharged of so much money as is represented by the deduction,

the practitioner shall, if any amount in respect of the relevant medical expenses to which the relevant payment relates has been paid by the subscriber or member, pay to the subscriber or member, as the case may be, an amount equal to the amount by which the aggregate of the amount paid by the subscriber or member and the amount of the relevant payment exceeds the relevant medical expenses.

(3) (a) The Minister for Finance may make such regulations as that Minister considers necessary or expedient for the purpose of giving full effect to this Chapter in so far as it relates to authorised insurers and the making of payments under contracts of insurance in respect of relevant medical expenses, and, in particular but without prejudice to the generality of the foregoing, regulations under this subsection may—

(i) specify the circumstances and the manner in which a payment (other than a relevant payment) may be made or claimed in respect of relevant medical expenses, and

(ii) provide for the indemnification of an individual against claims in respect of relevant medical expenses, or any other claims arising out of acts done or omitted to be done by the individual pursuant to this Chapter or regulations made under this subsection in so far as this Chapter relates or those regulations relate to authorised insurers and the making of payments under contracts of insurance in respect of relevant medical expenses.

(b) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(4) The provisions of the Tax Acts relating to the computation of profits or gains shall not be affected by the deduction of appropriate tax from relevant payments in accordance with subsection (1), and accordingly the amount of such relevant payments shall be taken into account in computing the profits or gains of the specified person for tax purposes.

524 Identification of, and issue of documents to, specified persons. [FA87 s16]

524.—(1) The specified person shall furnish to the accountable person concerned—

(a) in the case of a specified person resident in the State or a person having a permanent establishment or fixed base in the State—

(i) details of the specified person's income tax or corporation tax number, as may be appropriate, and

(ii) if the relevant payment includes an amount in respect of value-added tax, the specified person's value-added tax registration number, and

(b) in the case of a specified person other than a person mentioned in paragraph (a), details of the specified person's country of residence and the specified person's tax reference in that country.

(2) Where the specified person has complied with subsection (1), the accountable person, on making a relevant payment, shall give to such person in a form prescribed by the Revenue Commissioners particulars of—

(a) the name and address of the specified person,

(b) the specified person's tax reference as furnished in accordance with paragraph (a)(i) or (b) of subsection (1),

(d) the amount of the appropriate tax deducted from that payment, and

(e) the date on which the payment is made.

525 Returns and collection of appropriate tax. [FA87 s17]

525.—(1) Within 10 days from the end of every income tax month, an accountable person shall remit to the Collector-General all amounts of appropriate tax which the accountable person is liable under this Chapter to deduct from relevant payments made by the accountable person during that income tax month.

(2) Each remittance under subsection (1) shall be accompanied by a return containing, in relation to each specified person to whom a relevant payment has been made in the income tax month concerned, the particulars required by the return.

(3) A return shall be required to be made by an accountable person for an income tax month notwithstanding that no relevant payments were made by the accountable person in that income tax month.

(4) Every return shall be in a form prescribed by the Revenue Commissioners and shall include a declaration to the effect that the return is correct and complete.

(5) The Collector-General shall give the accountable person a receipt for the total amount so remitted.

(6) The provisions of the Income Tax Acts relating to the collection and recovery of income tax shall, in so far as they are applicable, apply to the collection and recovery of appropriate tax.

526 Credit for appropriate tax borne. [FA87 s18]

526.—(1) Where in relation to an accounting period a specified person is within the charge to corporation tax and has borne appropriate tax referable to that accounting period, the specified person may, subject to section 529, claim to have the amount of appropriate tax specified in subsection (4) set against corporation tax chargeable for that accounting period and, where such appropriate tax exceeds such corporation tax, to have the excess refunded to the specified person.

(2) Where in relation to a year of assessment a specified person is within the charge to income tax and has borne appropriate tax referable to the basis period for that year of assessment, the specified person may, subject to section 529, claim to have the amount of appropriate tax specified in subsection (4) set against the income tax chargeable for the year of assessment and, where such appropriate tax exceeds such income tax, to have the excess refunded to the specified person.

(3) The specified person shall, in respect of each claim under subsection (1) or (2), furnish, in respect of each amount of appropriate tax included in the claim, the form given to the specified person by an accountable person in accordance with section 524(2).

(4) The amount of the appropriate tax to be set against corporation tax for an accounting period or against income tax for a year of assessment in accordance with subsection (1) or (2) shall be the total of the appropriate tax referable to the accounting period or to the basis period for the year of assessment, as the case may be, which is included in the forms furnished in accordance with subsection (3) and not repaid under this Chapter.

527 Interim refunds of appropriate tax. [FA87 s19]

527.—(1) A specified person may make a claim for an interim refund of the whole or part of the appropriate tax referable to an accounting period or to a basis period for a year of assessment, as the case may be (in this section referred to as “the first-mentioned period”), and the inspector shall, if he or she is satisfied that the specified person making the claim has complied with the requirements of subsection (2), make such refund as is specified in subsection (3) and, subject to those requirements as modified by subsection (4)(a), make such refund as is specified in that subsection.

(2) The requirements of this subsection are—

(a) that the profits or gains for the accounting period or for the basis period for the year of assessment, as the case may be, immediately preceding the first-mentioned period have been finally determined for tax purposes,

(b) that the amount of tax which was payable for that accounting period or year of assessment corresponding to that basis period has been paid (whether by credit for appropriate tax or otherwise), and

(c) that the specified person shall, in respect of each relevant payment included in the claim, furnish to the inspector the form given to the specified person by an accountable person in accordance with section 524(2).

(3) The amount of the tax to be refunded shall be the excess of the total of the appropriate tax included in the forms furnished in accordance with subsection (2)(c) (and not already repaid under the provisions of this section) over the amount of tax referred to in subsection (2)(b) less the amount which the specified person is liable to pay or remit—

(a) under the Value-Added Tax Act, 1972, and the regulations made under that Act,

(b) under Chapter 4 of Part 42 and the regulations made under that Chapter, and

(c) in respect of employment contributions under the Social Welfare (Consolidation) Act, 1993, and the regulations made under that Act.

(4) (a) Where the first-mentioned period is the period in which the trade or profession of the specified person has been set up and commenced, paragraphs (a) and (b) of subsection (2) shall not apply and the inspector shall, in accordance with this subsection, make an interim refund to the specified person in respect of appropriate tax deducted from relevant payments taken, or to be taken, into account in computing the profits or gains of the trade or profession.

(b) For the purposes of determining the amount of the interim refund, the inspector shall determine—

(i) an amount equal to the amount of tax at the standard rate on an amount determined by the formula—

E	A _ B		C _ P

where—

A is the estimated total amount of the relevant payments to be taken into account as income in computing for tax purposes the profits or gains of the first-mentioned period,

B is the estimated total sum of all amounts to be so taken into account as income in computing those profits or gains,

C is the estimated number of months or fractions of months comprised in the period in respect of which the claim to the refund is made,

E is the estimated amount to be laid out or expended wholly and exclusively by the specified person in the first-mentioned period for the purposes of the trade or profession, and

P is the estimated number of months or fractions of months comprised in the first-mentioned period,

and the inspector shall make the estimates referred to in this formula to the best of his or her knowledge and belief and in accordance with the information available to him or her, and

(ii) the amount of appropriate tax deducted from the relevant payments in respect of which forms have been furnished in accordance with subsection (2)(c) after deducting from that amount any amount of such tax already refunded for the period in respect of which the claim to a refund is made.

(c) The inspector shall refund an amount of appropriate tax equal to the lesser of the amounts determined at subparagraphs (i) and (ii) of paragraph (b).

(5) Where the specified person claims and proves the presence of particular hardship, the Revenue Commissioners may waive (in whole or in part) one or more of the conditions for the making of a refund specified in this section and, where they so waive such a condition or conditions, they shall determine, having regard to all the circumstances and taking into account the objects and intentions of subsections (1) to (4), an amount of a refund or a further refund which they consider to be just and reasonable and they shall authorise the inspector to make such refund or such further refund, as the case may be, accordingly.

(6) For the purposes of this section, the income of a specified person for an accounting period or a basis period for a year of assessment shall be the total of all amounts received or receivable by the specified person which are taken into account in computing the profits or gains of the specified person's trade or profession for that period.

528 Apportionment of credits or interim refunds of appropriate tax. [FA87 s20]

528.—Where the form referred to in either section 526(3) or 527(2)(c) relates to 2 or more specified persons, any necessary apportionment shall be made for the purposes of giving effect to sections 526 and 527.

529 Limitation on credits or interim refunds of appropriate tax. [FA87 s21]

529.—No amount of appropriate tax shall be set off or refunded more than once under this Chapter, and any amount of appropriate tax refunded in accordance with section 527 shall not be available for set-off under section 526.

CHAPTER 2 Payments to subcontractors in certain industries

530 Interpretation (Chapter 2). [FA70 s17(1) and (13); FA72 Sch1 PtIII par4; FA76 s21; FA92 s28(a); FA95 s18(1)(a); FA96 s41(a); FA97 s13(1)(a), s146(1) and Sch9 PtI par5(3)]

530.—(1) In this Chapter—

“certificate of authorisation” means a certificate issued under section 531(11);

“certificates of deduction” has the meaning assigned to it by section 531(6)(f);

“construction operations” means operations of any of the following descriptions—

(a) the construction, alteration, repair, extension, demolition or dismantling of buildings or structures,

(b) the construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including walls, roadworks, power lines, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage,

(c) the installation in any building or structure of systems of heating, lighting, air-conditioning, soundproofing, ventilation, power supply, drainage, sanitation, water supply, burglar or fire protection,

(d) the external cleaning of buildings (other than cleaning of any part of a building in the course of normal maintenance) or the internal cleaning of buildings and structures, in so far as carried out in the course of their construction, alteration, extension, repair or restoration,

(e) operations which form an integral part of, or are preparatory to, or are for rendering complete such operations as are described in paragraphs (a) to (d), including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works,

(f) operations which form an integral part of, or are preparatory to, or are for rendering complete, the drilling for or extraction of minerals, oil, natural gas or the exploration for, or exploitation of, natural resources,

(g) the haulage for hire of materials, machinery or plant for use, whether used or not, in any of the construction operations referred to in paragraphs (a) to (f);

“the contractor” has the meaning assigned to it by the definition of “relevant contract”;

“director” means—

(a) in relation to a body corporate the affairs of which are managed by a board of directors or similar body, a member of that board or body,

(b) in relation to a body corporate the affairs of which are managed by a single director or similar person, that director or person,

(c) in relation to a body corporate the affairs of which are managed by the members themselves, a member of the body corporate,

and includes any person who is or has been a director;

“employee”, in relation to a body corporate, includes any person taking part in the management of the affairs of the body corporate who is not a director, and includes a person who is to be or has been an employee;

“forestry operations” means operations of any of the following descriptions—

(a) the thinning, lopping or felling of trees in woods, forests or other plantations,

(b) with effect from the 6th day of October, 1997, the planting of trees in woods, forests or other plantations,

(c) with effect from the 6th day of October, 1997, the maintenance of woods, forests and plantations and the preparation of land, including woods or forests which have been harvested, for planting,

(d) the haulage or removal of thinned, lopped or felled trees,

(e) the processing (including cutting or preserving) of wood from thinned, lopped or felled trees in sawmills or other like premises,

(f) the haulage for hire of materials, machinery or plant for use, whether used or not, in any of the operations referred to in paragraphs (a) to (e);

“meat processing operations” means operations of any of the following descriptions—

(a) the slaughter of cattle, sheep or pigs,

(b) the division (including cutting or boning), sorting, packaging (including vacuum packaging) or branding of, or the application of any other similar process to, the carcasses or any part of the carcasses of slaughtered cattle, sheep or pigs,

(c) the application of methods of preservation (including cold storage) to the carcasses or any part of the carcasses of slaughtered cattle, sheep or pigs,

(d) the loading or unloading of the carcasses or any part of the carcasses of slaughtered cattle, sheep or pigs at any establishment where any of the operations referred to in paragraphs (a) to (c) are carried on;

“the principal” has the meaning assigned to it by the definition of “relevant contract”;

“proprietary director”, means a director of a company who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than 15 per cent of the ordinary share capital of the company;

“proprietary employee” means an employee who is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other indirect means, to control, more than 15 per cent of the ordinary share capital of the company;

“qualifying period” means the period of 3 years, or such shorter period as the inspector may allow, ending on the 5th day of April in the year preceding the year of assessment which is the first year of assessment of the period in respect of which a certificate of authorisation is sought;

“relevant contract” means a contract (not being a contract of employment) whereby a person (in this Chapter referred to as “the contractor”) is liable to another person (in this Chapter referred to as “the principal”)—

(a) to carry out relevant operations,

(b) to be answerable for the carrying out of such operations by others, whether under a contract with the contractor or under other arrangements made or to be made by the contractor, or

but, as respects relevant contracts entered into on or after the 15th day of May, 1996, a separate relevant contract shall be deemed to exist between the principal and each individual member of a gang or group of persons, including a partnership in respect of which the principal has not received a relevant payments card, where relevant operations are performed collectively by the gang or group, notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person;

“relevant operations” means construction operations, forestry operations or meat processing operations, as the case may be;

“relevant payments card” has the meaning assigned to it by section 531(12);

“relevant tax deduction card” has the meaning assigned to it by section 531(6)(c)(ii);

“subcontractor” has the meaning assigned to it by section 531(1).

(2) In relation to a case where a subcontractor is chargeable to corporation tax, unless the context otherwise requires, references in this Chapter to tax shall include references to corporation tax and references to a year of assessment shall include references to an accounting period.

(3) For the purposes of the definition of “proprietary director” and “proprietary employee”, ordinary share capital which is owned or controlled as referred to in those definitions by a person, being a spouse or a minor child of a director or employee, or by a trustee of a trust for the benefit of a person or persons, being or including any such person or such director or employee, shall be deemed to be owned or controlled by such director or employee and not by any other person.

531 Payments to subcontractors in certain industries. [FA70 s17(2) to (12) and (14) to (17); FA76 s21; FA78 s46; FA81 s7; FA90 s131; FA92 s28(b) to (h); FA95 s18(1)(b) and (c); FA96 s41(b), (c) and (d); FA97 s13(1)(b) and (c)]

531.—(1) Subject to this section, where in the performance of a relevant contract in the case of which the principal is—

(a) a person who, in respect of the whole or any part of the relevant operations to which the contract relates, is the contractor under another relevant contract,

(b) a person—

(i) carrying on a business which includes the erection of buildings or the manufacture, treatment or extraction of materials for use, whether used or not, in construction operations,

(ii) carrying on a business of meat processing operations in an establishment approved and inspected in accordance with the European Communities (Fresh Meat) Regulations, 1987 (S.I. No. 284 of 1987), or

(iii) carrying on a business which includes the processing (including cutting and preserving) of wood from thinned or felled trees in sawmills or other like premises or the supply of thinned or felled trees for such processing,

(d) a local authority, a public utility society (within the meaning of section 2 of the Housing Act, 1966) or a body referred to in subparagraph (i) or (ii) of section 12(2)(a) or section 19 or 45 of that Act,

(e) a Minister of the Government,

(f) any board established by or under statute, or

(g) a person who carries on any gas, water, electricity, hydraulic power, dock, canal or railway undertaking, the principal makes a payment, or as respects relevant contracts entered into on or after the 15th day of May, 1996, is deemed to make a payment pursuant to subsection (3), to another person (whether the contractor or not and in this section referred to as “the subcontractor”), the principal shall deduct from the payment and pay to the Collector-General tax at the rate of 35 per cent of the amount of such payment.

(2) A person carrying on a business shall not be deemed to be a person of a kind specified in subsection (1)(b) by reason only of the fact that in the course of that business such person erects buildings for the use or occupation of such person or employees of such person.

(3) As respects relevant contracts entered into on or after the 15th day of May, 1996, where relevant operations are performed by a gang or group of persons, including a partnership in respect of which the principal has not received a relevant payments card, and notwithstanding that any payment or part of a payment in respect of such relevant operations is made by the principal to one or more of the gang or group or to some other person, then, for the purposes of this section and any regulations made under this section, such payment or part of a payment shall be deemed to have been made by the principal to the individual members of that gang or group in the proportions in which the payment or any amount in respect of the payment is to be divided amongst them.

(4) In computing for the purposes of Schedule D the profits or gains arising or accruing to a subcontractor who receives a payment from which tax has been deducted in accordance with subsection (1), the payment shall be treated as being of an amount equal to the aggregate of the net amount received after deduction of the tax and the amount of the tax deducted.

(5) In so far as a subcontractor is chargeable to tax in respect of any profits or gains arising or accruing to the subcontractor from a trade or vocation, the subcontractor shall be treated as having paid on account of tax so chargeable any tax which was deducted from payments taken into account in the computation of those profits or gains and which has not been repaid or for which a set-off has not been made, and the Revenue Commissioners shall make regulations for giving effect to this subsection and those regulations shall, in particular, include provision—

(a) as to the manner in which, and the periods for which, tax deducted under this section is to be taken into account as a sum paid on account of the liability to tax of a subcontractor,

(b) for repayment, on due claim made for a period (in this paragraph referred to as “the repayment period”) commencing on the 6th day of April in a year of assessment and ending on the 5th day of the month following the date of the payment or, if the payment was made on or before the 5th day of a month, ending on the 5th day of that month, of such portion of the tax deducted from payments received by a subcontractor during the repayment period (reduced by any amount of such tax repaid or set off) as appears to the Revenue Commissioners to exceed the proportionate part of the amount of tax for which the subcontractor is liable or is estimated to be liable for that year of assessment, and

(c) for repayment in cases where the total of the tax deducted from payments received by a subcontractor and not repaid to the subcontractor exceeds the aggregate of—

(i) the amount of tax for which the subcontractor is liable, and

(ii) any amount which the subcontractor is liable to remit—

(I) under the Value-Added Tax Act, 1972,

(II) under the Capital Gains Tax Acts,

(III) under Chapter 4 of Part 42, and

(IV) in respect of—

(A) employment contributions and self-employment contributions under the Social Welfare Acts,

(B) health contributions under the Health Contributions Act, 1979, and

(C) Employment and Training Levy under the Youth Employment Agency Act, 1981, as amended by the Labour Services Act, 1987.

(6) The Revenue Commissioners shall make regulations with respect to the assessment (including estimated assessment), charge, collection and recovery of tax deductible under subsection (1) and the regulations may, in relation to such tax, include any matters which might be included in regulations under section 986 in relation to tax deductible under Chapter 4 of Part 42 and, without prejudice to the generality of the foregoing, regulations under this subsection may include provision for—

(a) (i) the issue for a year of assessment, or, in relation to such class or classes of subcontractor as may be specified in the regulations, for such longer period as may be so specified, of certificates of authorisation,

(ii) the refusal to issue, appeal against refusal to issue, recall or cancellation of certificates of authorisation and the surrender of such certificates, and

(iii) the production of documents or other material, including a photograph of the subcontractor or, in a case where the subcontractor is not an individual, a photograph of the individual by whom the certificate of authorisation will be produced in accordance with subsection (12)(a), in support of an application for a certificate of authorisation;

(b) (i) the making, before the entering into of a relevant contract, by the persons who intend to enter into such a contract of a declaration, in a specified form, to the effect that, having regard to guidelines published by the Revenue Commissioners for the information of such persons as to the distinctions between contracts of employment and relevant contracts and without prejudice to the question of whether a particular contract is a contract of employment or a relevant contract, they have satisfied themselves that in their opinion the contract which they propose to enter into is not a contract of employment,

(ii) the publication of guidelines by the Revenue Commissioners for the purposes of subparagraph (i), and

(iii) the keeping by principals of every such declaration and the inspection of any or all such declarations;

(i) such records as may be specified in the regulations,

(ii) relevant payments cards and the entry on those cards of such particulars as may be specified in the regulations,

(iii) cards (in this Chapter referred to as “relevant tax deduction cards”) in such form as may be prescribed by the regulations and containing particulars of any deductions under subsection (1) and the entry on those cards of such other particulars as may be specified in the regulations;

(d) the making to the Revenue Commissioners of such returns relating to the payments made by principals as may be specified in the regulations and the inspection of the records referred to in paragraph (c) (including the cards referred to in that paragraph);

(e) the keeping by subcontractors of such records as may be specified in the regulations containing particulars of payments received by them, and the inspection of such records;

(f) the completion by principals of certificates of tax deducted (in this Chapter referred to as “certificates of deduction”) from payments made to subcontractors and, as respects relevant contracts entered into on or after the 15th day of May, 1996, the entry on certificates of deduction of such particulars as may be specified in the regulations;

(g) the furnishing by subcontractors to principals of all such information or particulars as are required by principals to enable principals to comply with any provision of regulations made under this section;

(h) the sending to subcontractors, in cases where tax was deducted under subsection (1) from payments made to them, of statements containing particulars of their liability (if any) to tax for a year of assessment.

(7) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(8) The provisions of every enactment and of the Income Tax (Construction Contracts) Regulations, 1971 (S.I. No. 1 of 1971), which apply to the recovery of any amount of tax which a principal of the kind referred to in subsection (1) is liable under this section and those Regulations to pay to the Collector-General shall apply to the recovery of any amount of interest payable on that tax as if that amount of interest were a part of that tax.

(9) Where an amount of tax which a person who is or is deemed to be a principal of the kind referred to in subsection (1) is liable under this section and any regulations under subsection (6) to pay to the Collector-General is not so paid, simple interest on the amount shall be paid by the person to the Collector-General and shall be calculated from the date on which the amount became due for payment at a rate of 1.25 per cent for each month or part of a month during which the amount remains unpaid.

(10) Subsection (9) shall apply to tax recoverable from a person by virtue of a notice under Regulation 12(1) of the Income Tax (Construction Contracts) Regulations, 1971 (S.I. No. 1 of 1971), as if the tax were tax which the person was liable under those Regulations to remit for the last income tax month (within the meaning of those Regulations) of the year, or, as appropriate, of the months ending in the accounting period, to which the notice relates.

(11) (a) The Revenue Commissioners shall, on application to them in that behalf by a person, issue to the person a certificate (in this section referred to as a “certificate of authorisation”) if they are satisfied—

(i) that the person is or is about to become a subcontractor engaged in the business of carrying out relevant contracts,

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