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At issue was payment of tax on EU grants 
A farmer and his son from Co Kildare have lost their legal challenge against an assessment for almost €500,000 by Revenue arising out of how they paid tax on EU farm payments received from the Department of Agriculture. 
The Tax Appeals Commission (TAC) rejected an appeal by tillage farmers, Martin and Kevin Byrne of Kilberry, Athy, Co Kildare, that their single farm payments should have been taxable as income by a company they had formed in 2008 to run their family farm. 
Martin Byrne had challenged an amended income tax assessment of just more than €400,000 issued by Revenue for the period 2010-2014, while his son, Kevin, appealed a similar demand for more than €93,000. 
The two appellants sought to have their single farm payments declared as income for their company, which was liable to corporation tax, rather than as individuals. 
They argued they received the single farm payments in a fiduciary capacity as they did not have an entitlement to the payments under EU rules. 
They also claimed Revenue was not within the statutory four-year time period allowed to amend their income tax assessments for an extra €79,000 for the 2010 tax year. 
Income tax 
However, Revenue claimed Mr Byrne and his son were liable for income tax on the single farm payments and that the transfer of the payments to the company represented a disbursement of the income they had earned. 
“It was not an expense incurred in earning the income and was not deductible,” Revenue stated. 
Tax officials said the two farmers needed to have registered the entitlements to the single farm payments in the name of the company if they had wanted the payments to be considered the income of the company. 
Revenue said it had also amended its corporation tax assessments of the company to reflect its view that the single farm payments were taxable as income for the two appellants. 
In evidence, Kevin Byrne said they had kept claiming the payments in their own names in order to protect against a cut in entitlements due to convergence measures under consideration by the EU. 
Mr Byrne estimated that he and his father could have lost about €100,000 if their entitlements had been formally transferred to the company. 
In its ruling, the TAC, which did not name the farmers, said the company would have been entitled to be registered by the Department of Agriculture as the recipient of single farm payment as it had taken a lease on the lands from September 2009. 
Deliberate decision 
However, TAC commissioner, Mark O’Mahony, said neither the company nor the Byrnes had taken any steps to effect such a registration in what Kevin Byrne had candidly accepted was a conscious and deliberate decision as it would have resulted in a reduction in the amount received in single farm payments. 
While Mr O’Mahony said he understood the rationale for their decision, he said the effect was that the company was never registered to receive the payments. 
“The entitlement to receive single farm payments was at all material times registered in the name of the appellants,” he observed. 
However, the TAC said Mr Byrne and his son were not entitled as a matter of law to receive payments which they had obtained as a result of “knowingly submitting incorrect information to the department.” 
Rejecting the appeal, Mr O’Mahony said he was satisfied that the two farmers had been correctly assessed by Revenue for income tax. 
As their tax returns for 2010 did not make a full and true disclosure of all material facts, Mr O’Mahony said Revenue was entitled to amend their tax assessments for that year outside the four-year time limit. 
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