A medical consultant has been left with a €86,071 income tax bill after tax authorities here disallowed his company's purported salary payments of €80,000 to his wife and sons over a two year period.
This follows Tax Appeals Commissioner, Claire Millrine, finding as fact that there exists "no evidence of payments made" by the doctor's company to his wife and sons in discharge of their duties over 2017 and 2016.
Ms Millrine also found that there was "no credible evidence of any duties carried out by the Appellant’s wife and children to justify the payments made".
The doctor set up a private company in 2011 with the purpose of providing services as a medical consultant to a locum agency and he was in receipt of pay of €230,000 per annum for two years, 2017 and 2016.
The company is 50/50 owned between the doctor and his wife where she also serves as a director.
The doctor claimed that the company paid his wife and two sons - one a student at the time - an aggregate €80,000 over 2016 and 2017.
At a remote hearing into the doctor’s appeal into the Revenue December 2021 income tax bill at the TAC in June of this year, Revenue contended that the claimed €80,000 salary payout to family members was "a tax efficient way of taking the money out of the company because he was going to support his wife and kids".
In her findings, Ms Millrine found that no evidence exists of any email correspondence from the appellant’s wife to third parties and the appellant’s sons to third parties, illustrative of them undertaking employment duties for the company.
Ms Millrine stated that having regard to the lack of evidence relating to the employment of the appellant’s wife and sons, she concluded that there existed no genuine employment relationship.
Ms Millrine stated that she was furnished with no documentary evidence to support that actual work was carried out.
All four members of the doctor’s family at the centre of the dispute gave sworn evidence at the oral hearing.
The medical consultant testified that he has been working in the community for a number of years "and paying high taxes".
In evidence, the man’s wife confirmed that her role was secretary in the company and she was paid once per month by cheque.
She testified that during the relevant years, her duties were general secretary work such as timesheets, mailing, taking notes, arranging her husband's schedule and contacting the locum agency.
Under cross examination, the woman could not pinpoint any emails wherein she corresponded with the locum agency on her husband’s behalf.
She said that in relation to conferences, she would research relevant conferences, be responsible for booking them and for arranging payment, flights and transportation.
One son told the hearing that that he was paid his salary in cash at times, but that he had no receipts of any payments.
Under cross examination by Revenue, it was put to the son that he was also working for a recruitment company in 2016 and he confirmed that this was the case.
A second son said that he was responsible for driving his father to work and waiting for his father until he was finished work to drive him home.
Under cross examination by counsel for Revenue, the second son testified that he was writing a thesis when he was assisting his father and that he was doing odd deliveries for a company during 2017.
The son confirmed that he was paid from the father's account and not the company account.
Revenue did allow pay of €5,198 to the medical consultant’s wife as remuneration associated with her duties as Director of the company and Ms Milrine upheld this finding.
- reporting Gordon Deegan
