Court of Appeal dismisses appeal, affirming appellants bear burden of proof on tax residence.

THE COURT OF APPEAL

APPROVED

NO REDACTIONS NEEDED

Record Number: 2024 266

High Court Record Number: 2023/179JR

Neutral Citation Number [2025] IECA 96

Meenan J. McDonald J. Collins J.

BETWEEN:

J.S.S., J.S.J., T.S., D.S. AND P.S.

APPLICANTS/APPELLANTS

-AND-

A TAX APPEAL COMMISSIONER

RESPONDENT

CRIMINAL ASSETS BUREAU

NOTICE PARTY

JUDGMENT of Mr. Justice McDonald delivered on 9th May 2025

Introduction

1. This is an appeal from a very careful and comprehensive judgment of Owens J. in the High Court ([2024] IEHC 565) delivered on 30th July 2024 in which he dismissed the appellants’ application for judicial review of a decision of the Tax Appeal Commission (“TAC”). The decision of the TAC in issue was given on 1st December 2022 in relation to a number of tax appeals brought by the appellants under Part 40A of the Taxes Consolidation Act, 1997 (as amended) (“the 1997 Act”) against the tax assessments and amended assessments described in para. 3 below. In its decision, the TAC determined that the appellants bear the burden of proof in their appeal before the TAC in relation to the issue of residence which was the sole issue addressed in the decision. It should be noted, in this context, that the appellants claim to have no liability to tax in circumstances where they assert that they are not resident in the State for tax purposes. The TAC’s

decision of 1st December 2022 should be read with a previous decision of the TAC of 13th October 2022 in which a similar conclusion was reached. The circumstances in which a second decision came to be made is addressed in more detail below. It is sufficient to record, at this point, that it arose in circumstances where counsel representing the appellants at a hearing on 10th October 2022 did not refer to a number of authorities which the appellants subsequently claimed provide support for their case that they do not bear the burden of proof in relation to the issue of residence.

Background

2. According to the evidence before the High Court, each of the appellants are members of the travelling community. Although they have addresses in this jurisdiction, the evidence given by their tax consultant, Mr. Eugene Dolan, is to the effect that they practice a nomadic lifestyle abroad “with the result that their caravans constitute the centre of their personal domesticity”. In Mr. Dolan’s affidavit, the first, second, third and fourth appellants were all described as tarmacking contractors who carry on business outside the State “in the main at various locations in other EU countries”. They are each described as self-employed. The fifth appellant was also stated to be self-employed.

3. According to Mr. Dolan, the Criminal Assets Bureau (“CAB”) on 31st March 2026 issued amended tax assessments for the income tax years 2004 to 2014 to each of the first, second and third named appellants. Insofar as the fourth named appellant is concerned, Mr. Dolan said that, similarly on the 1st March 2016, CAB issued amended income tax assessments for the income tax years 2006 to 2014 and also, on the same date, issued income tax assessments for the years 2004 and 2005.

4. Mr. Dolan further says that on 31st March 2016, income tax assessments were issued to the fifth named appellant for the tax years 2005 to 2008 and, on the same date, CAB also issued amended income tax assessments for the years 2009 to 2014.

5. Each of the appellants appealed the assessments and amended assessments. Each of the appeals is dated 26th April 2016, and in each one of them the case is made that the appellants were not resident or ordinarily resident for income tax purposes in the State in any of the tax years in issue. In each appeal, it is alleged that the appellant lives a nomadic lifestyle and has spent considerable periods of time in those years in a number of countries. These vary from appellant to appellant but include the United Kingdom, France, Germany, Canada and Italy.

6. Each of the appeals bears the respective Personal Public Service number of the relevant appellant. It should also be noted that, on the basis of the materials exhibited to the replying affidavit of Kevin McMeel sworn on behalf of CAB on 8th November 2023, the first and second appellants have previously made returns to the Revenue Commissioners. The second appellant made a return for the 2008 tax year in which he was described as “Citizen of Ireland – resident but not ordinarily resident in the State”. The first appellant made a return for the 2012 tax year in which he was described in an identical way.

7. The appeals initially came before the TAC in 2018, following which the TAC gave a preliminary ruling in relation to the admissibility of certain of the appeals. That ruling was challenged in judicial review proceedings which were unsuccessful in the High Court but which were subject to an appeal to this Court. In a judgment delivered by Power J. ([2020] IECA 73) the appeal was allowed and the matters were remitted to the TAC where they subsequently came on for hearing before a different Commissioner. On 29th June 2022, following a contested three day hearing, the TAC gave a preliminary

decision in relation to the admissibility of the appeals following which the resumption of the hearing was fixed for Monday 10th October 2022. It appears that, in its decision of 29th June 2022, the TAC held that a non-resident would not be a “chargeable person” within the statutory meaning of that term.

8. The hearing of the appeal subsequently resumed in October 2022 during which the TAC heard oral submissions regarding which party bore the onus of proof in establishing the tax residence status of the appellants for the relevant years of assessment. The parties requested a preliminary decision on that issue in light of the fact that the hearing was scheduled to continue on 13th and 14th October 2022. With impressive speed and efficiency, the TAC issued its preliminary ruling on 13th October 2022 in which the Commissioner very clearly set out her reasons why she was of the view that the onus of proof in relation to residence lay on the appellants. In support of that conclusion, the Commissioner referred to the well-known decision of Gilligan J. in T.J. v Criminal Assets Bureau [2008] IEHC 168. After this ruling was given, the hearing of the appeals resumed and evidence was given by two witnesses on behalf of the appellants, one of which was the tax agent who had prepared the tax returns described above. Both witnesses were cross-examined by counsel on behalf of CAB. The hearing did not conclude within the allotted time in October 2022 but the TAC made 1st and 2nd December 2022 available to allow the balance of the appellants’ evidence to be given together with any evidence which CAB might wish to adduce.

9. Notwithstanding the fact that the matter had been fully argued before the TAC on 10th October 2022 and decided by the TAC at that time and notwithstanding that the hearing of the appeals had resumed on that basis, the appellants sought to make a further submission in relation to the onus of proof on the issue of residence. This appears to have first been raised on 26th October 2022. It was later followed by new submissions to the TAC on behalf of the appellants on 22nd November 2022. These new submissions were signed both by Mr. Dolan and by counsel retained at that time on behalf of the appellants. The reasons for this revision was stated to be:

“the discovery, in the interim, of what we consider to be two highly relevant UK tax cases, Untelrab v McGregor [1986] STC 1 and Cesena Sulphur Co Ltd v Nicholson … 1 TC 888 concerning the issue of onus of proof in relation to tax residency in this country. These two cases have not been opened previously to the Commissioner.”

10. The submission sought to explain the failure to identify these authorities at an earlier time on the following basis: - “This revision is also a reflection of the difficulties inherent in the wider legal system re dealing with members of this community as identified by Hogan J. in the Supreme Court case McDonagh and Clare County Council [2022] IESC 2 (McDonagh) albeit is the Appellants position that a significant contributory factor was the Respondent’s failure to afford the Appellants the same opportunities as provided to taxpayers in general, prior to the issue of the relevant income tax assessments at issue here. The comments of Hogan J in the McDonagh case is dealt with in more detail later.”

11. At a later point in the submission, more extensive reference was made to the decision in McDonagh. That decision emphasises that the Irish traveller community is a vulnerable minority at the margins of society. That is obviously a very important consideration in many circumstances where public authorities interact with the travelling community. However, it is of no relevance to the identification of authorities for the purposes of legal submissions. That is entirely a matter for the lawyers. The disadvantages facing the traveller community could not conceivably be a basis to excuse the belated identification of purportedly relevant authority by a legal advisor. That was a task for the legal advisor alone.

12. While these new submissions referred to two Irish authorities addressing the manner in which taxation statutes should be interpreted, they made no reference to any Irish cases on the onus of proof in tax appeals. Instead, reliance was placed on the decision of the UK Special Commissioners (which, at that time, had a similar status and role in the United Kingdom as the TAC in this jurisdiction) in Untelrab v. McGregor (Inspector of Taxes) [1986] STC 1 and also on a nineteenth century authority namely Cesena Sulphur Co. Ltd v. Nicholson (1876) LR 1 Ex D 428. In the Cesena Sulphur case, the Court of Exchequer of England and Wales rejected a submission made on behalf of the U.K. Revenue authorities that the taxpayer, in a tax appeal, bears the onus of proof in relation to residence. If the decisions in Untelrab and Cesena Sulphur stood on their own, and if there were no countervailing Irish authority, they might provide some (albeit thin) authority for the proposition advanced in the appellants’ submissions. In Untelrab, the Special Commissioners referred briefly to the Cesena Sulphur case as authority for the proposition that the burden of proving residence lies on the Crown. However, that issue was addressed only cursorily in Cesena Sulphur at p. 454 where Huddleston B. briefly remarked:

“I admit that the onus of proving the residence lies upon the Crown, as my Brother Cleasby said in Attorney General v Alexander … and if the Crown fails to satisfy the Court that the place of residence is within the area of taxation, the company ought not to be taxed.”

13. If, however, one looks, in turn, at the judgment of Cleasby B. in Attorney General v. Alexander (1874) LR 10 Ex 20, there is no more than a passing reference on p. 32 of the report to the effect that the court, there, had to consider whether it had been made out that the relevant corporation was residing within the United Kingdom. That is the nearest Cleasby B. came to addressing the burden of proof in relation to the residence of a taxpayer. There is no discussion of the issue at all and no explanation of the rationale for suggesting that the onus of proof rests on the Revenue.

14. More importantly, the decision in Untelrab is entirely inconsistent with later authority from England and Wales which was not cited by the appellants to the TAC namely Wood v. Holden (Inspector of Taxes) [2006] 1 WLR 1393. That was a decision of the Court of Appeal of England and Wales and is therefore considerably more authoritative than a

decision of the Special Commissioners. It also demonstrates that the argument made by the appellants in relation to the English case law is wholly misconceived. In that case, an issue arose as to whether or not a British Virgin Islands company known as Eulalia Holding Capital BV was tax resident in the United Kingdom. At p. 1397 of the report, it was stated by Chadwick L.J. that it was common ground before the Special Commissioners in that case that, under s. 50(6) of the Taxes Management Act, 1970 (UK) (“the 1970 Statute”) the onus of proof as to residence was on the taxpayer. However, it is clear that, in the High Court of England and Wales, Park J. went further and made a specific finding that the legal burden of proof lay on the taxpayers to prove that they were not resident in the United Kingdom. At p. 1412, Chadwick L.J. quoted what was said by Park J. at para. 59 of the latter’s judgment as follows: - “I wish to say more about the way in which the commissioners have based their decision on what they see as the failure of Mr and Mrs Wood to discharge the burden of proving a negative. I accept, despite a submission of Mr. Goldberg to the contrary, that, when an inspector of taxes makes an adjustment to a taxpayer’s self-assessment and the taxpayer appeals against the adjustment, the statutory burden on appeal rests on the taxpayer to show that the adjustment is wrong. That is the effect of section 50(6) of the Taxes Management Act 1970: ‘If, on an appeal it appears to … the commissioners … by evidence (c) that the appellant is overcharged by an assessment … the assessment … shall be reduced accordingly, but otherwise the assessment … shall stand good.’”

15. Chadwick L.J. also pointed out that Park J., in the High Court, had accepted that there may come a point where the taxpayer has produced evidence which appears to show that the assessment is wrong, at which point the evidential burden may pass to the Revenue. But what is more relevant for present purposes is that, contrary to the decision of the Special Commissioners in Untelrab, the Court of Appeal in Wood v. Holden expressly upheld the decision of Park J. that the burden of proof lies on the taxpayer. This is clear from what was said by Chadwick L.J. at p. 1413 – 1414:- “In Rhesa Shipping Co SA v. Edmunds [1985] 1 WLR 948, Lord Brandon of Oakbrook pointed out , at pp 955-956, that a judge is not bound, always, to make a finding one way or the other with regard to facts averred by the parties: ‘He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden.’ But that is not a course which should be adopted unless ‘owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take’. It is a feature of tax litigation‒not least where the litigation arises from a tax avoidance scheme‒ that, in the first instance, the facts are likely to be known only to the taxpayer and his advisers. The revenue will not have been party to the transaction; and will know only those facts which have been disclosed by the taxpayer or others; following, perhaps the exercise of the revenue’s investigatory powers. I have no doubt that there are cases in which the evidence before the commissioners is so unsatisfactory that the only just course for them to take is to hold that the taxpayer has not discharged the burden of proof which section 50(6) of the 1970 Act has placed upon him. But, equally, I have no doubt that the judge was correct, for the reasons which he gave, to hold that the present case was not one of those cases. There was no reason to think that the material facts had not been disclosed; and the commissioners did not hold that it was for that reason that they were unable to decide the question of residence. I agree with the judge that, in the present case, the ‘third alternative’ to which Lord Brandon referred in the Rhesa Shipping case was not one which was properly open to the investigators.” (emphasis added).

16. In response to the appellants’ new submissions before the TAC, CAB delivered written submissions on 29th November 2022 in which objection was raised to the way in which the appellants were seeking to re-argue a matter that had been fully argued on 10th October 2022 and that had already been decided by the TAC. In the submission, CAB also identified that the current law in England and Wales had moved beyond the decisions advanced in the appellants’ submissions. Specific reliance was placed on the

decision in Wood v. Holden.

17. As counsel for the appellants acknowledged in the course of the hearing of this appeal, It would have been open to the TAC in the circumstances to refuse to entertain the additional submissions provided belatedly by the appellants’ legal team after the ruling that had already been given on 13th October 2022. This was especially so in circumstances where the case law on which the appellants sought to rely was readily available long before the commencement of the hearing in October 2022 and where the appellants’ legal advisers had advanced no good reason to excuse the failure to identify the authorities (such as they were) before the commencement of that hearing. The failure to do so is compounded by the fact that the authorities on which the appellants’ advisers sought to rely no longer represented the law in England and Wales and had been overtaken by later authority in the form of the Court of Appeal judgment in Wood v. Holden. This was a completely unsatisfactory way to proceed on the part of the appellants’ advisers and it seriously disrupted the orderly hearing of the appeals before the TAC which had been due to resume in the first week of December 2022.

The decision of the TAC challenged in these proceedings

18. Notwithstanding the unsatisfactory approach taken by the appellants’ advisers, the TAC agreed to allow the additional submissions to be made. With impressive speed, the TAC, on 1st December 2022, delivered an updated decision in which the Commissioner recorded that the appeals had been set down for continued hearing over a number of dates in December 2022 and that those dates had been notified to the parties and agreed by them in October 2022. The Commissioner also noted that, on 22nd November 2022, eight days prior to the resumption of the hearing on 1st December, the appellants’ tax advisor sent to the TAC revised submissions (not previously requested by the TAC) together with legal authorities not previously furnished to the TAC and requested that the TAC should consider them in relation to the onus of proof. The Commissioner noted that, while it would have been open to her to refuse to consider the additional authorities, she decided in the interests of fairness to consider them and she so notified the parties on 25th November 2022. She then examined the authorities in question and noted that it was doubtful whether these additional authorities could be said to represent the position in the United Kingdom. In that context, she referred to Wood v. Holden and a number of other decisions. The Commissioner then addressed the position in Ireland and she referred to her earlier decision of October 2022 in which she had identified that there was insufficient authority to allow her to depart from the established jurisprudence regarding onus of proof. She concluded that the law in this jurisdiction is clear as set out in her decision of 13th October 2022 and she concluded that the revised submissions and additional authorities furnished by the appellants’ agent on 22nd November 2022 were not relevant to that decision and had no bearing upon the established jurisprudence of the Irish courts.

19. The decision of 1st December 2022 is now the subject of these Judicial Review proceedings. The sole ground of challenge relates to the burden of proof. The appellants continue to maintain that the burden of proof lies on CAB to establish that the appellants are resident in Ireland for tax purposes.

The application for Judicial Review

20. On 24th February 2023 the appellants filed a statement required to ground their application for judicial review in the High Court. The grounds upon which relief was sought are succinctly set out in paragraph (a) of Part E of the statement of grounds as follows: - “The Respondent’s decision contains an error of law on the face of the record in holding that when an appellant, appealing a tax assessment on themselves, raises an issue of tax residency before the Tax Appeals Commissioner, the onus of proving that the tax payer is not within the jurisdiction of the State is on the appellant rather than on the Revenue Commissioners to show that they have jurisdiction to raise an assessment to tax that person.”

21. Following a contested hearing (in which CAB had been put on notice of the application for leave) the High Court (Bradley J.), on 1st November 2023 gave leave to the appellants to apply for judicial review of the TAC’s decision of 1st December 2022 on the grounds set out above. The substantive hearing of the judicial review application subsequently took place before Owens J. who delivered a detailed and very clear judgment on 30th July 2024.

22. In his judgment, the High Court judge identified that, by reason of their date, the appeals fell to be determined under Part 40A of the 1997 Act. As he explained, Part 40A was inserted into the 1997 Act by the Finance (Tax Appeals) Act 2015 which was commenced on 21st March 2016 by the Finance (Tax Appeals) Act, 2015 (Commencement Order 2016) (S.I. No. 110 of 2016). Given that each of the appeals here commenced after that date, the judge explained that they fell within Part 40A. The judge carefully reviewed the relevant provisions of the 1997 Act. In para. 76 of his judgment, the judge said that liability to tax (other than preliminary tax) arises when a person is assessed to tax. A tax assessment may be made either by the taxpayer under the self-assessment regime or it may be issued by an officer of the Revenue Commissioners in exercise of statutory powers. In para. 77 of his judgment, the judge indicated that an income tax assessment has statutory force and that, having regard to the provisions of (inter alia) s. 949AK (1)(c) of the 1997 Act, it is presumed to be correct and lawful in all aspects which touch on liability to tax and the amount of tax payable unless and until it is displaced on appeal. The judge added in para. 78 that a tax assessment will be displaced as to amount where facts are proved to the TAC to show that, for some reason, the tax assessed was either not due at all or was less or more than the amount assessed, and he referred to s. 949AK of the 1997 Act in that context. He also indicated in the same paragraph that the evidence in an appeal before the TAC may establish that the tax assessed may not be due for many other reasons including lack of taxable receipts, offset of losses and cases where an appellant can demonstrate that he or she was not tax resident.

23. The judge later referred to the decision in Deighan v. Hearne [1986] I.R. 603 where Murphy J. in the High Court held that a tax assessment, even where mistaken, may become final and conclusive where the taxpayer does not dispute it within the relevant statutory period. That decision was in turn upheld by the Supreme Court ([1990] 1 I.R. 499). He concluded in para. 83 of his judgment that it follows that a person who has been assessed for income tax under Schedule D Case 1 income is treated by the law as a “chargeable person” until it is proved to the satisfaction of the TAC that the tax assessed is, for whatever reason, not due. In paragraph 91 of his judgment, Owens J. explained that, a person who wishes to displace a tax assessment may do so by proof that the person assessed was not tax resident as defined in s. 819 of the 1997 Act during a tax year or by proving that no trading income was earned or that chargeable gains were not made or that losses should be set off against income or that tax liability does not arise for a myriad of other reasons.

24. It is clear from paragraphs 92 to 112 of the High Court judgment that, notwithstanding that Wood v. Holden had been cited in the course of the proceedings before the TAC, the appellants still sought to rely on the decision in Untelrab. Unsurprisingly, the judge found that the views expressed in Untelrab do not represent current UK thinking on the issue. He correctly described Untelrab as a weak authority.

25. Having disposed of the argument based on Untelrab, the judge then concluded his judgment by drawing attention to the fact that the appellants have a positive case to make that they have no liability to tax by reason of their non-residence in the State for tax purposes. They themselves have all the information which may support their contention that, in any of the tax years covered by the assessments, they were not present in Ireland for the number of days specified in that section. In para. 114 of his judgment, the judge reiterated that the statutory assessment and appeal structure in the TAC draws no distinction between validity of an income tax assessment on the basis of tax residence and validity on any other basis relating to taxation, such as absence of trade or disputed interpretation of a taxation provision. Reflecting existing Irish law, he added that the burden lay on the taxpayer challenging the tax assessment. He put the matter as follows in para. 110 of his judgment:

“Where statute throws on a person an obligation to prove something, as it is the case in an appeal against a tax assessment under Part 40A of the TCA, it is impossible to suggest that the onus should be the other way. The applicants have pointed to no provision in the TCA which could support their contention that individuals who claim not to be tax resident are entitled to this special treatment.” (emphasis added)

The appeal to this Court

26. In their appeal from the judgment of the High Court judge, the appellants contend that the jurisdiction of the TAC to hear and determine income tax appeals depends on a valid assessment against a chargeable person. A significant part of the appellants’ submissions revolved around the definition of “chargeable person”. The relevant definition is contained in s. 950 of the 1997 Act in respect of income tax years up to and including 2012. The relevant definition in the case of the tax years 2013 and following years is contained in section 959A of the 1997 Act. Save in relation to a number of exclusions (which are not relevant here) the definition in both provisions is the same. A chargeable person is defined as meaning: “as respects a chargeable period, a person who is chargeable to tax for that period, whether on that person’s own account or on account of some other person…”

27. The appellants argue that, while the TAC, absent a challenge to chargeability, may presume that the person is a chargeable person, that is not the case where chargeability is challenged. In such circumstances, the appellants argue that it is incumbent on the TAC to hear and determine the issue of chargeability in order to decide whether the TAC has jurisdiction to continue to hear and determine the appeals. It was further submitted on behalf of the appellants that the burden on an appellant to displace a tax assessment relates solely to quantum “after it has been determined that the person is a chargeable person”. It was further submitted that the issue of chargeability goes to the root of the powers of both the assessing tax inspector and the TAC and that “a finding of nonchargeability means that there was never any power to raise a valid enforceable assessment…”. In addition, the case was made that issues relating to chargeability on grounds of residence are sui generis since they “do not relate to quantum but to the power to raise the assessment”.

Analysis of the appellants’ main argument on the appeal

28. Counsel for the appellants described the issue of chargeability as a “critical issue” in this appeal but he was unable to identify any relevant authority to support the appellants’ contention that, on an appeal to the TAC, issues in relation to the residence of a taxpayer should be treated differently to any other issue that goes to the question of whether a taxpayer is chargeable to tax within the meaning of the 1997 Act. As the High Court judge lucidly explained, the issue of residence is just one of several factors that have the potential to affect chargeability. In order to understand why that is so, it is necessary to consider some fairly basic provisions of the 1997 Act. In the first place, it is important to recall that, under s. 12 of the 1997 Act, income tax is charged in respect of (inter alia) profits or gains described or comprised in a number of schedules.

29. The relevant schedule for present purposes is Schedule D as provided for in s. 18 of the 1997 Act. Section 18(1) makes clear that tax under Schedule D is charged in respect of the annual profits or gains arising or accruing (inter alia) by “any person residing in the State from any trade, profession or employment, whether carried on in the State or elsewhere…”. Section 18(2) then provides that tax under Schedule D shall be charged under a number of “Cases”. For present purposes, the relevant case is Case I which is tax in respect of any trade. The combined effect of these aspects of ss. 12, 18(1) and 18(2) of the 1997 Act is that a person will be chargeable to tax if the person was, during a relevant chargeable period: (a) residing in the State, (b) carrying on a trade (c) from which that person has made a profit or a gain. The person will not be chargeable to tax under Case I in respect of a chargeable period if any one of those three criteria are not met. In this context, the statutory definition of “chargeable person” (as set out in para.

26 above) is expressly conditioned by reference to “chargeable periods”. In the case of tax years up to and including 2012, a chargeable period is defined by s. 321(2) of the 1997 Act as an accounting period of a company or a year of assessment. In the case of subsequent tax years, s. 959A defines a chargeable period as an accounting period of a company or a tax year. This means that, in assessing whether an individual is liable to tax, one always needs to examine the factual circumstances during a specific tax year to see whether that person was or was not resident in Ireland during that period, whether that person was carrying on a trade during that period and whether that person realised a profit or a gain during that period from that trade. It may well transpire that a person may meet those criteria in one period but not in another. Everything will depend upon the facts which are found to exist.

30. In my view, the plaintiffs have wholly failed to demonstrate that, in considering whether a person is a chargeable person within the meaning of the 1997 Act, a distinction must be drawn between residence, on the one hand, and the remaining criteria for chargeability, on the other. In this context, issues relating to whether a person is carrying on a trade frequently come before the TAC. Likewise, the question whether a person has generated a profit or a loss on his or her trade also arises on a very frequent basis. It has never been suggested that the Revenue bears the burden of proof in an appeal to the TAC in respect of such issues. There is a long line of authority both here and in the various jurisdictions within the United Kingdom to the effect that, on an appeal from a tax assessment , the burden of proof lies on the taxpayer in respect of these issues. That was the view taken by Gilligan J. in T.J. v. Criminal Assets Bureau [2008] IEHC 168 at para.

50. In turn, that view was reiterated by Charleton J. (albeit in the context of a V.A.T. appeal) in Menolly Homes Ltd. v. The Appeal Commissioners [2010] IEHC 49 at para. 22.

31. In his judgment, Owens J. also referred to Halsbury’s Laws of England, 5th Ed., 2023, Vol. 99, at para. 708 where a long succession of English and Scottish decisions are cited on the effect of s. 50(6) of the 1970 Statute (which is in very similar terms to the equivalent provisions in this jurisdiction). On the basis of these authorities, Halsbury states, in clear terms, that, on an appeal to the relevant appeal tribunal against a tax assessment, the onus is upon the taxpayer to demonstrate that the assessment ought to be reduced or set aside. Among the authorities cited by Halsbury in support of this statement are: Jonas v. Bamford (Inspector of Taxes) [1973] STC 519; DIK Transmissions (Dundee) Ltd v IRC [1980] STC 724 ( Ct of Sess.); Cutmore v. Leach (Inspector of Taxes) [1982] STC 61; Barnes-Sherrocks v. McIntosh (Inspector of Taxes) [1989] STC 674; Phillimore v. Heaton (Inspector of Taxes) [1989] STC 374; Napier v. Griffiths (Inspector of Taxes) [1991] STC 55 (Court of Appeal); Blackpool Marton Rotary Club v. Martin (Inspector of Taxes) [1990] STC 1 (Court of Appeal) and Gault v. IRC [1990] STC 612 (Ct of Sess). Halsbury also cites a succession of earlier cases predating the 1970 Statute to the same effect.

32. Section 50(6) of the 1970 Statute addressed in Halsbury is in strikingly similar form to s. 949AK of the 1997 Act which applies to the appellants’ appeals before the TAC. Section 50(6) provides as follows: “If, on an appeal notified to the tribunal, the tribunal decides—

(a) that, ... the appellant is overcharged by a self-assessment;

(b) that ... any amounts contained in a partnership statement are excessive; or

(c) that the appellant is overcharged by an assessment other than a selfassessment, the assessment or amounts shall be reduced accordingly, but otherwise the assessment or statement shall stand good.”

33. While s. 949AK(1) of the 1997 Act in this jurisdiction addresses undercharges as well as overcharges, it follows a similar pattern to s. 50(6) of the 1970 Statute and provides as follows:

“(1) In relation to an appeal against an assessment, the Appeal Commissioners shall, if they consider that—

(a) an appellant has, by reason of the assessment, been overcharged, determine that the assessment be reduced accordingly,

(b) an appellant has, by reason of the assessment, been undercharged, determine that the assessment be increased accordingly, or

(c) neither paragraph (a) nor (b) applies, determine that the assessment stand.”

34. Both s. 949AK(1) of the 1997 Act and s. 50(6) of the 1970 Statute proceed on the basis that the assessment will stand unless it is established that the assessment is wrong. As outlined above, there is a long line of case law on both sides of the Irish Sea which has taken the consistent view that, under the provisions of these sections (and their respective predecessor provisions1), the taxpayer bears the burden of demonstrating that a tax The language of the sections and their predecessors has varied somewhat over the years but a consistent feature of the their terms is that, unless the appeal body determines otherwise, the assessment will stand. See, for example, s. 934(3) of the 1997 Act which applies to appeals under Part 40 of the Act. No argument was made on behalf of the appellants that the difference in language between s. 934(3) and s. 949AK (which is reflected in the difference in language between the current version of s. 50(6) of the 1970 Statute in the United Kingdom and earlier versions of that sub-section) affects the status of the earlier authorities on the burden of proof. assessment is wrong. While most of those cases have been decided in the context of issues other than residence, the appellants have completely failed to put forward any plausible basis to suggest that issues relating to residence are required to be addressed differently to any other aspect of chargeability. Moreover, as explained in paras. 14 to

15 above, Wood v. Holden provides clear authority for the proposition that appeals of assessments on residence grounds are treated in precisely the same way as appeals of assessments on other grounds.

35. The continued attempt by the appellants in the course of this appeal to rely on the

decision in Untelrab is, frankly, both baffling and troubling. In light of the decision in Wood v. Holden, the decision in Untelrab (and the nineteenth century authorities cited in it) can no longer be regarded as good law in so far as the position in England and Wales is concerned. Remarkably, the written and oral submissions of counsel for the appellant failed to address in any way the decision in Wood v Holden notwithstanding that it effectively overruled Untelrab on which counsel continued to rely. It is true that an Irish Court would be entitled to prefer the decision of a lower tribunal of a foreign jurisdiction over that of an Appeal Court in the same jurisdiction. However, the Court is entitled to expect that, where a party wishes to argue that the decision of the lower tribunal of a foreign jurisdiction should be followed, detailed argument would be made to explain why it is contended the decision of the foreign Appeal Court was wrong and the decision of the lower tribunal was correct. No attempt was made on behalf of the appellants in this case to take that approach. Instead, in the written submissions furnished on behalf of the appellants, an argument was made that the decision in Untelrab reflects a “long established fundamental principle that the burden of proof of taxability is on the State”. This appears to be based on the combined effect of Untelrab and the elderly authority of Cesena Sulphur but it takes no account at all of later authority such as Wood v. Holden which CAB expressly cited in its written submission to the TAC in November 2022. It also takes no account of the myriad of authorities on the burden of proof in appeals against assessments cited in paras. 30 to 31 above. In my view, it is deeply unsatisfactory that this approach was taken and I strongly deprecate it.

Analysis of the remaining arguments made by the appellants

36. In the written and oral submissions of counsel for the appellants, an attempt was made to rely on the decision of the Supreme Court in Revenue Commissioners v. Doorley [1933] I.R. 750. An attempt was also made to rely on the decision of Barrington J. in Ó Coindealbháin v. Gannon [1986] I.R. 154. However, both of those authorities are concerned with the interpretation of tax statutes. They do not support the appellants’ case in any way.

37. An attempt was also made to rely upon a more recent decision in Burgess v. Revenue and Customs Commissioners [2015] UK UT 578 (TCC). This is a decision of the Upper Tribunal (Tax and Chancery) which acts as an Appeal Tribunal from decisions of the first-tier Tribunal which has taken over the role previously played by the Special Commissioners in the United Kingdom. In my view, that case is not relevant. It was concerned with discovery assessments under certain specific statutory provisions. It is clear from para. 38 of the decision that it was accepted that, in respect of certain issues that arose under the statutory provisions in question, the burden of proof rested with the UK Revenue and Customs Commissioners but the same paragraph makes clear that, it was common ground between the parties, that the burden of proof in relation to all other issues rested on the taxpayer. It is therefore of no assistance to the appellants here.

38. Counsel for the appellants also placed some emphasis upon s. 1034 of the 1997 Act which provides as follows: - “A person not resident in the State, whether a citizen of Ireland or not, shall be assessable and chargeable to income tax in the name of any trustee, guardian, or committee of such person, or of any factor, agent, receiver, branch or manager, whether such factor, agent, receiver, branch or manager has the receipt of the profits or gains or not, in the like manner and to the like amount as such non-resident person would be assessed and charged if such person were resident in the State and in the actual receipt of such profits or gains; but, in the case of a partnership, the precedent partner (within the meaning of section 1007) or, if there is no precedent partner, the factor, agent, receiver, branch or manager shall be deemed to be the agent of a nonresident partner.”

39. It was submitted by counsel for the appellants that s. 1034 has the effect that, even in the case of Irish sourced income arising to a non-Irish tax resident, tax is assessable and chargeable to income tax solely in the name of the non-resident person’s agent in the State. It was suggested that this reflects a fundamental principle in Irish tax law that the power to raise income tax assessments is confined to the territorial reach of the State. Reliance was placed on the well-known decision of the House of Lords in Colquhoun v. Brooks (1889) 14 App. Cas. 493 which emphasised that, in the absence of express words to the contrary, the Income Tax Acts then in force imposed a territorial limit on the basis either that income was earned in the United Kingdom or that the person who earned the income was resident there. Counsel for the appellants also cited Article 29.8 of the Constitution which provides that: - “The State may exercise extra-territorial jurisdiction in accordance with the generally recognised principles of international law.”

40. In my view, this argument is based on a misinterpretation of the meaning and effect of section 1034 of the 1997 Act. Section 1034 of the 1997 Act (in common with section 1035 which has a somewhat similar effect) is plainly designed to assist the Revenue Commissioners to collect tax from (among others) an agent of a person who, although not resident in the State, realises profits or gains through the agency of a third party in the State such as a factor or an agent. Section 1034 ensures that the non-receipt by the factor or agent of the profits does not prevent that person being assessed on behalf of the non-resident. In turn, s. 1035 limits the assessment that may be made to the profits or gains realised by the trade of the non-resident in the State through the relevant factorship or agency as the case may be.

41. The decision in Colquhoun v. Brooks is not relevant. There could be no suggestion made that the State here is attempting to levy taxation against persons who are not resident in the State. It is quite clear from the provisions of s. 18 of the 1997 Act that the Act is designed in a way which reflects the principle that tax is payable by those residing in the State. As the extract from s. 18 of the 1997 Act (quoted in para. 29 above) makes clear, the tax in issue in this case will only be chargeable where the taxpayer is resident in the State. In turn, s. 18 must be read with s. 819 of the 1997 Act which sets out the circumstances in which a person will be considered to be resident in the State for a year of assessment. There is nothing in s. 819 that seeks to extend the tax reach of the State in a way that infringes any principle of international law. On the contrary, s. 819 makes it clear that, before the State will treat a taxpayer as resident in Ireland during a relevant tax period, the taxpayer must have spent a substantial proportion of time in the State during that period.

42. While the provisions of s. 819 should be read as a whole, it is sufficient, for the purposes of this judgment, to refer to s. 819(1) which sets out the basic test for residence as follows: - “For the purposes of the Acts, an individual shall be resident in the State for a year of assessment if the individual is present in the State—

(a) at any one time or several times in the year of assessment for a period in the whole amounting to 183 days or more, or

(b) at any one time or several times—

(i) in the year of assessment, and

(ii) in the preceding year of assessment,

for a period (being a period comprising in the aggregate the number of days on which the individual is present in the State in the year of assessment and the number of days on which the individual was present in the State in the preceding year of assessment) in the aggregate amounting to 280 days or more.”

43. Section 819 thus sets out the parameters of what constitutes residence in the State for the purposes of chargeability to tax under s.

18. In an appeal before the TAC, it will, largely, be a question of fact whether a taxpayer comes within the parameters of the statutory test. The test turns on the number of days the taxpayer was present in the State in the periods mentioned in s. 819(1). That falls to be assessed in the same way as any other issue of fact that may be relevant to the taxpayer’s challenge, by way of appeal, to a tax assessment. Having regard to the well-established burden of proof that lies on taxpayers on such an appeal, that means that, if the taxpayers wish to assert that they were not present in the State for the requisite number of days, evidence on that issue will have to be given either by the taxpayers themselves or by some other witness with first-hand knowledge of the facts.

That said, while the taxpayers bear the legal burden of proof to establish that they were not resident in the State, it is clear from the decision in Wood v. Holden that there may come a point where the evidential burden will shift to the Revenue Commissioners or CAB (as the case may be). That is unsurprising and reflects what Clarke J. (as he then was) described, in Koger Inc. v. O’Donnell [2013] IESC 28, at para. 6.5, as a common sense proposition. The relevant principle is well encapsulated by McGrath on Evidence, 3rd. Ed., 2020, at paras. 2-161 to 2-162 as follows:

“The general rule in civil cases is that the party that bears the legal burden in respect of an issue will also bear the evidential burden in respect of that issue. The standard which has to be met is to make out a prima facie case. A party will have made out a prima facie case when, on the evidence given, it would be open to the tribunal of fact, if no other evidence was given, or if it accepted that evidence even though contradicted in its material facts, to enter a verdict for that party. If a plaintiff has failed to discharge the evidential burden upon him or her with regard to the constituent elements of his or her cause of action then … the case will be dismissed.

It is sometimes suggested that the discharge by a plaintiff of its evidential burden may lead to the evidential burden shifting to the defendant but, as noted by Clarke J in Koger Inc v. O'Donnell, this simply reflects the common sense proposition that, if a plaintiff has made out a prima facie case and the defendant does not adduce any evidence to rebut it, the plaintiff will be found to have discharged its legal burden of proof. Moreover, an evidential burden of proof will not shift simply because a plaintiff has adduced evidence from a number of witnesses in relation to a matter.”

44. The last sentence in that extract reflects what was said by Lord Brandon in the Rhesa Shipping case in the passage quoted by Chadwick L.J. in Wood v. Holden, at p. 1413 (replicated in para. 15 above) to the effect that a judge or tribunal is not bound to accept the evidence of the party who bears the legal burden of proof and is entitled to reject it where it is unsatisfactory.

Conclusion

45. In my view, none of the arguments made on behalf of the appellants withstands scrutiny. The appellants have failed to put forward any plausible basis to support their case that CAB bears the legal burden of proof in relation to the issue of residence. It will therefore be for the appellants to put forward sufficient evidence before the TAC to establish, on the balance of probabilities, that they were not resident in the State within the meaning of s. 819 of the 1997 Act during the relevant tax years in issue in their appeals. That is neither surprising nor illogical. To paraphrase Chadwick L.J. in Wood v. Holden, at p. 1413, the relevant facts relating to the appellants’ movements are best known to the appellants. They should have no difficulty in giving evidence relevant to the test set out in s. 819 of the 1997 Act.

46. For all of the reasons outlined above, I am of opinion that the appellants have failed to establish that the decision of the High Court judge was wrong in any respect. In my view, both the decision of the High Court and the underlying decision of the TAC were entirely correct. The appellants bear the burden of proof on their appeals against the tax assessments in issue and this applies equally to their challenge to the assessments on the grounds that they claim not to have been resident in the State within the meaning of the 1997 Act during the periods in issue. In the circumstances, their appeal will be dismissed and the decision of the High Court will be affirmed.

47. In light of the fact that the appellants’ appeal is to be dismissed, my provisional view is that CAB should be entitled to its costs of the appeal to be adjudicated in default of agreement. If the appellants wish to contend for a different order as to costs, they will need to deliver a short submission of not more than 2,000 words on the issue of costs within 14 days from the date of electronic delivery of this judgment, in which event CAB will have a similar period to respond in a replying submission of similar length, following which the Court will determine the issue.

48. Both Meenan and Collins JJ. are in agreement with this judgment and with the order that I propose.