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10 1987

FINANCE ACT, 1987

Chapter III

Payments in respect of Professional Services by Certain Persons

Interpretation (Chapter III).

13. —(1) In this Chapter—

accountable person” has the meaning assigned to it by section 14 ;

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;

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 the said 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 falls to be finally computed for the purposes of the said Case I or II:

Provided that—

(i) where two 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, then, the interval shall be deemed to be part of the second basis period,

(iii) the reference in subparagraph (i) to the overlapping of two periods shall be construed as including a reference to the coincidence of two 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;

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

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 Chomhairle Oiliúna;

relevant payment” means a payment made on or after the 6th dayof June, 1987, in respect of professional services whether or not such services are provided to the accountable person making the payment, but excludes—

(a) emoluments within the scope of Chapter IV of Part V of the Income Tax Act, 1967 , to which that Chapter applies, and

(b) payments under a construction contract within the meaning of section 17 of the Finance Act, 1970 , from which tax has been deducted in accordance with the provisions of subsection (2) of that section, or would have been so deducted but for the provisions of subsection (8) of that section;

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

tax” means income tax or corporation tax, as the context may require.

(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 therefrom, and

(b) in relation to a specified person, appropriate tax referable to an accounting period or to 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 the said period and where there is more than one such relevant payment in the said period the aggregate of the appropriate tax deducted from such payments.

Accountable persons.

14. —(1) In this Chapter, “accountable person” means—

(a) a Minister of the Government,

(b) a local authority within the meaning of section 2 (2) of the Local Government Act, 1941 , and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971 ,

(c) a health board,

(d) the General Medical Services (Payments) Board established under the General Medical Services (Payments) Board (Establishment) Order, 1972 (S.I. No. 184 of 1972),

(e) the Attorney General,

(f) the Director of Public Prosecutions,

(g) the Revenue Commissioners,

(h) the Commissioners of Public Works in Ireland,

(i) the Legal Aid Board,

(j) a vocational education committee or a regional technical college established under the Vocational Education Act, 1930 ,

(k) An Chomhairle Oiliúna established under the Industrial Training Act, 1967 ,

(l) a harbour authority established under the Harbours Act, 1946 ,

(m) An Chomhairle Oiliúna Talmhaíochta established under the Agriculture (An Chomhairle Oiliúna Talmhaíochta) Act, 1979 ,

(n) An Foras Talúntais established under the Agriculture (An Foras Talúntais) Act, 1958 ,

(o) Údarás na Gaeltachta established under the Údarás na Gaeltachta Act, 1979 ,

(p) the Industrial Development Authority established under the Industrial Development Act, 1950 , and continued in being by the Industrial Development Act, 1986 ,

(q) Córas Tráchtála established under the Export Promotion Act, 1959 ,

(r) Shannon Free Airport Development Company Limited being the company referred to in the Shannon Free Airport Development Company Limited Acts, 1959 to 1986,

(s) Bord Fáilte Éireann established under the Tourist Traffic Act, 1939 , or

(t) an institution of higher education within the meaning of the Higher Education Authority Act, 1971 .

(2) For the purposes of this Chapter the Minister for Finance may by Regulations extend the meaning of accountable person by the inclusion in subsection (1) of further persons or classes of persons but such inclusion shall not have effect in relation to payments made before a date to be specified in the Regulations.

(3) Where a Regulation is proposed to be made under subsection (2), a draft thereof shall be laid before Dáil Éireann and the Regulation shall not be made until a resolution approving of the draft has been passed by Dáil Éireann.

Deduction of tax from relevant payments.

15. —(1) An accountable person making a relevant payment shall deduct out of the amount of the payment the appropriate tax in relation to the payment. The specified person to whom such payment is made shall allow such deduction upon receipt of the residue of the payment, and the accountable person making such deduction shall be acquitted and discharged of so much money as is represented by the deduction, as if that sum had actually been paid.

(2) The provisions of the Tax Acts in relation to the computation of profits or gains shall not be affected by the deduction of appropriate tax from relevant payments in accordance with the provisions of 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.

Identification of, and issue of documents to, specified persons.

16. —(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 his 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, his value-added tax registration number, and

(b) in the case of a specified person, other than a person mentioned in paragraph (a), details of his country of residence and his 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 person's tax reference as furnished in accordance with paragraph (a) (i) or (b) of subsection (1),

(c) the amount of the relevant payment,

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

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

Returns and collection of appropriate tax.

17. —(1) Within ten days from the end of every income tax month, the accountable person shall remit to the Collector all amounts of appropriate tax which he is liable under this Chapter to deduct from relevant payments made by him 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 shall give the accountable person a receipt for the total amount so remitted.

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

Credit for appropriate tax borne.

18. —(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 he may, subject to the provisions of section 21 , claim to have the amount of appropriate taxspecified 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 him.

(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 he may, subject to the provisions of section 21 , claim to have the amount of appropriate tax specified in subsection (4) set against the income tax chargeable for that year of assessment and, where such appropriate tax exceeds such income tax, to have the excess refunded to him.

(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 him by an accountable person in accordance with the provisions of section 16 (2).

(4) The amount of the appropriate tax to be set against corporation tax for an accounting period or 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 any of the provisions of this Chapter.

Interim refunds of appropriate tax.

19. —(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 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 the said requirements as modified in subsection (4) (a), make such refund as is specified in that subsection.

(2) The requirements of this subsection are that—

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

(b) the specified person shall, in respect of each relevant payment included in the claim, furnish to the inspector the form given to him by an accountable person in accordance with the provisions of section 16 (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 the provisions of subsection (2) (b) (and not already repaid under the provisions of this section) over the amount of tax referred to in subsection (2) (a) less the amount which he is liable to pay or remit—

(a) under the Value-Added Tax Act, 1972 , and the Regulations made thereunder,

(b) under Chapter IV of Part V of the Income Tax Act, 1967 , and the Regulations made thereunder, and

(c) in respect of employment contributions under the Social Welfare (Consolidation) Act, 1981 , and the Regulations made thereunder.

(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, the provisions of subsection (2) (a) shall not apply and the inspector shall, in accordance with the following provisions of 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 said trade or profession.

(b) For the purposes of determining the amount of the said 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 the said 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 knowledge and belief and in accordance with the information available to him, and

(ii) the amount of appropriate tax deducted from the relevant payments in respect of which forms have been submitted in accordance with the provisions of subsection (2) (b) after deducting therefrom 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) In circumstances 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 the Revenue Commissioners so waive such condition or conditions, they shall determine, having regard to all the circumstances and taking into account the objects and intentions of the previous provisions of this section, 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 him which are taken into account in computing the profits or gains of his trade or profession for that period.

Apportionment of credits or interim refunds of appropriate tax.

20. —Where the form referred to in either section 18 (3) or section 19 (2) (b) relates to two or more specified persons, any necessary apportionment shall be made for the purposes of giving effect to sections 18 and 19 .

Limitation on credits or interim refunds of appropriate tax.

21. —No amount of appropriate tax shall be set off or refunded more than once under the provisions of this Chapter and any amount of appropriate tax refunded in accordance with the provisions of section 19 shall not be available for set-off under the provisions of section 18 .