Directors appeal misuse of tax relief ruling

TWO directors of a construction company have appealed to the Supreme Court against a decision that a scheme under which they received some £600,000 in tax-free dividends was a tax avoidance scheme involving a misuse of export sales tax reliefs.

The appeal by John O’Flynn, Pinewood, Kilcrea, Ovens, Co Cork; Michael O’Flynn, Kilcrea, Ovens and their company, O’Flynn Construction Co Ltd (OFC), will involve the five-judge Supreme Court giving its first interpretation of the meaning of Section 811 of the Taxes Consolidation Act, the general anti-avoidance provision of that act.

The Revenue Commissioners had claimed a scheme which involved the brothers receiving payments of £298,000 each in 1992 was “far from being a normal use” of tax-free export sales relief (ESR) provisions. However, the Appeals Commissioners of the Revenue later found the scheme was not a tax avoidance transaction.