Businessman challenges Revenue over tax-avoidance scheme claims

A businessman has brought a High Court challenge against Revenue’s determination that he engaged in a complex tax-avoidance transaction.

Anthony Donlon, of Claughan House, Lower Church Rd, Raheen, Co Limerick, brought the action arising out of Revenue’s treatment, claiming its imposition of a tax liability on him is an unjust attack on his constitutionally protected property rights.

Last November Revenue issued a notice of opinion, under the Taxes Consolidation Act, in respect of transactions lawfully entered into by Mr Donlon in late 2007. The scheme was called ‘Schroders Ready Made 26’ by Revenue.

The opinion stated that Mr Donlon’s actions in Nov/Dec 2007 constituted a tax-avoidance transaction, adding that a total tax advantage of €2.18m had accrued to Mr Donlon.

Mr Donlon, who appealed the opinion to Revenue, said the two transactions on which the opinion is based involved private bank Schroders & Co. He made a loss on one transaction and a profit on the other.

He said the profit he made was exempt from tax, and deducted his loss when computing chargeable gains for his 2007 tax return. In his action against the Revenue Commissioners Ireland and the attorney general, Mr Donlon wants the Revenue notice of opinion of Nov 26 last quashed.

He is also seeking a number of declarations including that a section of the Taxes Consolidation Act is unconstitutional. He is further seeking an injunction preventing Revenue from relying on or enforcing the notice of opinion.

Leave to bring the challenge was granted yesterday, on an ex-parte basis, by Mr Justice Michael Peart. The case comes before the court again in April.