Tax controversy

Revenue’s Co-operative Compliance Framework is a voluntary programme open to taxpayers in Revenue’s Large Corporates Division which is designed to facilitate a more open relationship between Revenue and large corporates. Revenue’s stated aim for the CCF is to create and develop that a relationship between Revenue and large corporates that is based on trust and co-operation in order to achieve the highest level of voluntary tax compliance and certainty.

Revenue outline some of the benefits of joining the CCF as having access to a dedicated caseworker and a reduced level of compliance interventions. However, the scheme presents significant obligations for corporates who wish to participate. In particular participants must commit to an Annual Risk Review meeting with Revenue and undertake certain agreed risk reviews.

It is worth noting that as part of the Annual Risk Review meeting, compliance with transfer pricing provisions contained in Part 35A of the Taxes Consolidation Act 1997 may be evaluated. However, transfer pricing compliance activities may also take place outside of the formal CCF process. In particular, Revenue reserve the right to assess transfer pricing compliance through a Transfer Pricing Compliance Review (TPCR) programme (i.e., whereby the company/group undertakes a self-review) and/or a transfer pricing audit.

EY can assist clients by discussing the CCF program and evaluating the merits of signing up and support client through the application process.

For corporates who are already members of the CCF EY can assist by:

• Carrying out self-reviews and technical submissions to Revenue,
• Preparation for the annual Risk Review Meeting,
• Working with clients to develop a Tax Control Framework.

If you wish to discuss the CCF program or require assistance with your ongoing participation in it, please feel free to contact the EY team listed here or your regular EY contact.

Transfer pricing dispute resolution

In recent times transfer pricing (‘TP’) has seen an increase in disputes both domestically and internationally. As a result of this Revenue has expanded its TP audit and Competent Authority resources.

EY can help you to understand your options, develop a strategy, and guide you through the steps to resolve TP disputes. We do this via:

Mutual Agreement Procedure (MAP)

The mutual agreement procedure (“MAP”) is a dispute resolution mechanism available to taxpayers in international tax disputes. The purpose of MAP is to efficiently eliminate double taxation without creating situations of double non-taxation. Its use is particularly effective in managing TP disputes where double taxation occurs as a result of an upward adjustment in one jurisdiction without any corresponding downward adjustment in another jurisdiction.

The Irish MAP can comprise of two stages. At a domestic level, the Irish Competent Authority may first evaluate if it can unilaterally resolve the issue. If the Irish Competent Authority cannot resolve the issue unilaterally, it will contact the Competent  Authority of the other jurisdiction involved in order to resolve the issue by mutual agreement.

EY has a team of transfer pricing experts that can assist clients in all phases of the MAP process, including:

• Provision of guidance on how best to utilise the MAP process,
• Preparation of the initial MAP request,
• Preparation of robust transfer pricing analyses and documentation in respect of the intra-group transactions in question,
• Assistance in negotiations and settlement with the relevant Competent Authorities.

If you wish to discuss MAP or require assistance with an on-going MAP process, please feel free to contact the EY team listed here or your regular EY contact.

Correlative Adjustment

A correlative adjustment claim is one for an adjustment of profits under the terms of a double taxation agreement (“DTA”) which Ireland has in force with another country. The purpose of a correlative adjustment is to provide an Irish tax resident company with relief from double taxation that would otherwise result from an adjustment to an arm’s length amount, of the profits of an associated company which is tax resident in another country.

If a  correlative adjustment claim is wholly or partly refused by Revenue, a company may request MAP assistance from the Irish Competent Authority, provided the request is within the time limit for a MAP request set out in the relevant DTA.

EY’s transfer pricing team can assist clients in respect of correlative adjustments by carrying out the following:

• Preparation of correlative adjustment claims,
• Preparation of robust transfer pricing analyses and documentation in respect of the intra-group transactions in question,
• Assistance in negotiations and settlement with the Irish Competent Authority,
• If required, MAP assistance.

Advance Pricing Agreement (APA)

An advance pricing agreement ("APA") is an agreement between one or more competent tax authorities and a taxpayer that governs the treatment, for tax purposes, of future transactions between associated taxpayers. Irish APAs can be bilateral or multilateral, whereby they involve the relevant foreign tax authority(ies) and the foreign taxpayer(s).

The APA process consists of a number of stages (1) Pre-filing, (2) formal APA application (3) evaluation of APA application and negotiation of APA (4) formal agreement and (5) annual reporting

An APA gives a group tax certainty in respect of the pricing of the covered transactions typically for a period of three or five years. In addition to tax certainty, the use of an APA can result in time and cost savings relative to a transfer pricing examinations by tax authorities, as well as freedom from penalty exposure.

EY has a team of transfer pricing experts that can assist clients in all phases of the APA process, including:

• Initial planning, including assessment of the proposed intra-group transactions and selection of the proposed transfer pricing method(s),
• Support at pre-filing meetings,
• Preparation of the information / documentation required as part of the APA application process,
• Assistance in negotiation with the Irish Competent Authority,
• Preparation of annual reports as specified in the APA.

If you wish to discuss APAs or require assistance with an on-going APA, please feel free to contact the EY team listed here or your regular EY contact.

It can and does happen that the Revenue dispute the tax treatment applied by a taxpayer to particular transactions or receipts and absent agreement assessments may be issued. Such assessments may be appealed by the taxpayer to the Tax Appeals Commission (‘TAC’). The TAC is independent of the Revenue Commissioners and its role is to adjudicate, hear and determine such appeals.

The appeal process is quite formal and the appellant is required to prepare a statement of case and an outline of its arguments in advance of a formal hearing. The hearing of the appeal can be virtual or in person. The TAC will in due course issue its determination. The losing party may seek to appeal the determination of the TAC on a point of law to the High Court.  

The whole process from the appeal through to the hearing before TAC and beyond needs careful management. Our team is experienced in managing all phases of the tax appeal process and with the assistance of EY Law can similarly manage appeals in the High Court and beyond.  

If you wish to discuss the tax appeals process or require assistance with an ongoing/prospective appeal, please feel free to contact the EY team listed here or your regular EY contact.