An asset management firm has lost out in a bid to reclaim €2.1 million in VAT from Revenue.
This follows the Tax Appeals Commission (TAC) rejecting the firm's appeal over Revenue's decision not to make VAT repayments totalling €2.1m to the company.
After hearing three days of evidence and submissions in the case, Commissioner, Simon Noone found that the services provided by the firm in question are VAT exempt and that Revenue was correct to refuse the company’s claim for repayment of VAT.
The case came before the TAC after Revenue first refused the firm’s claim in February 2019 for a VAT repayment of €1.43 million and in April 2022 refused the firm’s claim for a €728,612 payment in VAT.
The appellant firm was engaged in the distribution of funds in the funds management industry and its principal service was to procure investors to buy units in funds through the means of selling units/shares in the funds.
The appellant firm was appointed as a Global Sub-Distributor and in turn it appointed sub-sub-distributors, who in turn appointed end-distributors, or else dealt directly with institutional investors.
Counsel for Revenue told the TAC hearing that it was a remarkable and unusual feature of the appeal that it involved someone trying to extricate itself from a tax exemption.
Counsel stated that the firm was doing so, in truth, solely to get an input credit and that the purpose of the appeal was to achieve a situation where a taxable activity was inserted in the middle of a chain of distribution where everyone else was exempt.
In his findings at the end of an 83 page report, Mr Noone pointed out that tax law allows for a VAT exemption concerning entities "arranging for" an issuance of securities.
Mr Noone stated that in the case, he was of the view that the services of the Appellant were "arranging for" an issue of other securities.
He said that the purpose of the firm's services was to procure investors to invest in units in the funds, and the activities of the appellant were directed to that goal.
He said that units in the funds only issued on the subscription of investors, and without such subscription no issuance would occur.
He said that consequently, he was satisfied that the Appellant was, via negotiation, arranging for the issue of units in the funds.
Reporting by Gordon Deegan
