Court remits case to Appeal Commissioner due to failure to identify specific evidence for emoluments finding.

THE HIGH COURT

REVENUE

[2025] IEHC 733

Record No. 2020/89R

Between

EXPRESS MOTOR ASSESSORS LIMITED (IN LIQUIDATION)

Appellant

and

REVENUE COMMISSIONERS

Respondent

Judgment of Mr. Justice Conor Dignam delivered on the 18th day of December 2025

INTRODUCTION

1. This is an appeal by way of case stated from the Tax Appeals Commission pursuant to section 949AQ of the Taxes Consolidation Act 1997.

2. The question that was stated for the opinion of the Court is:

“Whether or not I [the Appeal Commissioner] was correct in law in:

Determining in Paragraph 85(b) of the determination, having regard in particular to my analysis and findings and particularly those findings set out in paragraphs 29, 32 to 42 and 58 to 65

“That the net amount of €5,939 in 2015 and €21,008 in 2016 in relation to mileage paid to the director to be emoluments paid to the director, and are subject to PAYE/PRSI/USC and to employers PRSI by the Appellant.””

3. The background is as follows.

4. Express Motor Assessors Limited was a motor assessor company specialising in accident damage reporting. I will refer to it as “Express Motors” or “the company”. The company’s directors were Mr. Donal G. Daly and Mrs Mary Daly. Mr. Daly was also an employee of the company. So also was Ms. Annette Grayson, Mr. Daly’s daughter. The company went into voluntary liquidation on the 11th November 2016. Mr. Stephen Doran is the liquidator. Mr. Doran prosecuted the appeal before the Appeal Commissioner and this appeal by way of case stated.

5. Following a Revenue audit in relation to the calendar years 2014, 2015 and 2016, the respondent (“the Revenue”) raised an assessment for additional liabilities on the company in respect of VAT and PAYE/PRSI/USC for 2015 and 2016. The assessments were appealed by the company. Following the hearing before the Appeal Commissioner, the Revenue Commissioners accepted that there was not an additional liability in respect of VAT. Thus, the Appeal Commissioner only had to deal with the liability in respect of PAYE/PRSI/USC. The Appeal Commissioner held in favour of the company in relation to certain items but determined that the net amounts of €5,939 in 2015 and €21,008 in 2016 in relation to mileage paid to the director were emoluments paid to the director and are subject to PAYE/PRSI/USC and to employers PRSI by the company. This case stated only concerns those amounts.

APPLICABLE PRINCIPLES

6. There was no dispute about the meaning of emoluments or whether such emoluments are chargeable to tax. Nor was there any real dispute between the parties as to the applicable principles.

7. The burden of proof in a tax appeal before the Tax Appeals Commission is on the taxpayer. In Menolly Homes v Appeal Commissioners [2010] IEHC 49, Charleton J said:

“…the burden of proof "that the amount due is excessive" rests on the taxpayer. This reversal of the burden of proof onto the taxpayer is common to all forms of taxation appeals in Ireland. Powers are given to the inspector to be present, to produce evidence and to give reasons in support of the assessment. The Appeal Commissioners, if the taxpayer proves over-charging, must abate or reduce the assessment accordingly, but otherwise an order must be made that the assessment shall stand...

… The burden of proof in this appeal process is, as in all taxation appeals, on the taxpayer. This is not a plenary civil hearing. It is an enquiry by the Appeal Commissioners as to whether the taxpayer has shown that the relevant tax is not payable. The absence of mutuality in this form of appeal procedure is illustrated by the decision of Gilligan J. in T.J. v. Criminal Assets Bureau, [2008] IEHC 168. While the appeal in question there concerned income tax, the observations made in the course of the judgment as to the nature of a tax appeal are germane to deciding this issue. The applicant in that case was assessed for income tax by a tax inspector assigned to the Criminal Assets Bureau. He was assessed to tax on a large amount of income from apparently mysterious sources. Invoking his statutory right of appeal in those circumstances, the applicant sought disclosure of all information on which the assessment was made. Referring to the Revenue Customer Service Charter, the court noted that there was a self-imposed obligation on the Revenue Commissioners to give all relevant information whereby the taxpayer would understand his tax obligations. This did not extend, it was held by Gilligan J., to making an order for discovery. In taking the appeal, the taxpayer was undertaking the burden of appeal within the relevant formula as to the relief which he might be granted if successful. At para. 50 Gilligan J. stated:-

"The whole basis of the Irish taxation system is developed on the premise of self assessment. In this case, as in any case, the applicant is entitled to professional advice, which he has availed of, and he is the person who is best placed to prepare a computation required for self assessment on the basis of any income and/or gains that arose within the relevant tax period. In effect, the applicant is seeking discovery of all relevant information available to the respondents against a background where he has, by way of self assessment, set out what he knows or ought to know, is the income and gains made by him in the relevant period.“”

8. The principles applying to this Court’s jurisdiction on a case stated on a question of law are also well-established.

9. In Mara (Inspector of Taxes) v Hummingbird Limited [1982] ILRM 421, at 426, Kenny J said:

“The line between questions of law and those of fact can rarely be drawn firmly so as to separate one from the other.

A Case Stated consists in part of findings on questions of primary fact, e.g. with what intention did the taxpayers purchase the Baggot Street premises. These findings on primary facts should not be set aside by the Courts unless there was no evidence whatever to support them. The Commissioner then goes on in the Case Stated to give his conclusions or inferences from these primary facts. These are mixed questions of fact and law and the Court should approach these in a different way. If they are based on the interpretation of documents, the Court should reverse them if they are incorrect for it is in as good a position to determine the meaning of documents as is the Commissioner. If the conclusions from the primary facts are ones which no reasonable Commissioner could draw, the Court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusions show that he has adopted a wrong view of the law, they should be set aside. If however they are not based on a mistaken view of the law or a wrong interpretation of documents, they should not be set aside unless the inferences which he made from the primary facts were ones that no reasonable Commissioner could draw.”

10. In DA MacCarthaigh, Inspector of Taxes v Cablelink Limited [2003] 4 IR 510, the Supreme Court cited this passage and the summary of relevant principles set out by Blayney J in Ó Culacháin v McMullan Brothers [1995] 2 IR 217 at 222:

(1) Findings of primary fact by the judge should not be disturbed unless there is no evidence to support them.

(2) Inferences from primary facts are mixed questions of fact and law.

(3) If the judge’s conclusions show that he has adopted a wrong view of the law, they should be set aside.

(4) If his conclusions are not based on a mistaken view of the law, they should not be set aside unless the inferences which he drew were ones which no reasonable judge could draw.

Some evidence will point to one conclusion, other evidence to the opposite:

these are essentially matters of degree and the judge’s conclusions should not be disturbed (even if the Court does not agree with them, for we are not retrying the case) unless they are such that a reasonable judge could not have arrived at them or they are based on a mistaken view of the law.

11. The same principles were set out by Costello P in Proes v Revenue Commissioners [1998] 4 IR 174 at page 182.

THE EVIDENCE

12. At paragraphs 37 and 38 of the Determination itself, the Appeal Commissioner says:

“37. I have examined the evidence submitted in the form of the nominal ledger entries from books of first entry used to support the annual accounts entries for the company for the years ended 30th April 2015 and 2016 in order to determine the veracity of these matters. I have confirmed that the annual accounts for the Company contained entries in the annual accounts for motor expenses 30 April 2015

– €28,763 and 30 April 2016 – €31,355.

38. It was necessary therefore to examine the make-up of these amounts from the prime records submitted to TAC.”

13. He stated at paragraph 18 of the Case Stated that:

“In reaching my conclusion at 85(b) of my determination I relied on the nominal ledger listings from prime records and from the evidence presented at the Appeal hearing in determining that the amount of €5,939 paid to Mr. Daly in 2015, the amount of €21,008 accrued to Mr. Daly in year ended 30 April 2016 and paid to him by contra entry on liquidation of the company in November 2016, were emoluments.”

14. The evidence that was presented to the Appeal Commissioner was oral evidence from the liquidator and Ms. Annette Grayson, and the evidence of Mr. Peter Wall of the Revenue. A booklet of documents was also put into evidence. Both parties also submitted Statements of Case and the appellant submitted an Updated Statement of Case. I had a transcript of the oral evidence, a booklet of the documentary evidence (exhibit 4 to the Case Stated), and the Statements of Case.

THE COMPANY’S CASE

15. The company’s general case is that the Appeal Commissioner erred in his analysis and findings and that he misdirected himself in respect of the evidence. It was submitted that as the determination was based on the Commissioner’s interpretation of oral evidence and documents, the Court is in as good a position as the Commissioner to determine the issue.

16. It is also claimed that the Appeal Commissioner’s determination suffers from a number of specific errors, which are mixed questions of fact and law, in respect of the amounts of €5,939 and €21,008 respectively. I will deal with each of these amounts in turn.

THE REVENUE COMMISSIONERS’ CASE

17. The Revenue Commissioners emphasised that the burden of proof in a tax appeal is on the taxpayer and it was therefore for the company to discharge the onus of establishing that the payments made to Mr. Daly were something other than a payment that brought them within the charge to Schedule E.

18. It was submitted that there is no actual question of law in the question that was proposed by the company and is contained in the Case Stated and the appeal is therefore outside the applicable statutory framework. It is submitted that what is being contended in this case is that the findings of fact made by the Appeal Commissioner are wrong. It is not sufficient for the company to contend merely that the Commissioner got it wrong; it must establish that the findings are such that no reasonable decision-maker could have made them having regard to the evidence. It is submitted that there was sufficient evidence before the Commissioner for him to reasonably make the findings of fact and to reach his conclusions.

DISCUSSION

19. I propose to deal with the two amounts separately. However, paragraphs 32-38 of the Determination clearly relate to both amounts. The Appeal Commissioner stated:

“32. It was agreed between the parties that the director used a car owned by the Appellant Company in the course of carrying out his duties. The witness for the Respondent presented evidence for the basis of his assessment.

33. The witness for the Respondent described the basis of his assessment as being derived from detailed mileage records maintained by Mr. Daly. In evidence he stated:

“Mr. Daly kept meticulous notebook records of every trip he made every day, from time leaving to coming back, to the amount of miles and where he went.”

34. The Liquidator disputed this and stated that there were no payments of mileage expenses in records examined by him. He did however say in evidence that

“I have further examined the nominal ledger listing for the year ended 30th April 2016 and I’ve noted that there is a journal entry debited to motor expenses in the amount of €21,008 and the credit for this amount has been posted to accruals.”

35. The Liquidator stated clearly in relation to mileage expenses; “They weren’t paid. They weren’t paid to a director, period.” The witness for the Respondent suggested that these expenses were attributed to Mr. Daly as follows; “he has calculated the mileage expenses. He has credited his directors current account with these figures to offset against money he owes to the company.”

36. We have therefore, a conflict of evidence in the matter of whether or not the Director Mr. Daly has actually been paid mileage expenses for the periods under appeal.

37. I have examined the evidence submitted in the form of the nominal ledger entries from books of first entry used to support the annual accounts entries for the company for the years ended 30th April 2015 and 2016 in order to determine the veracity of these matters. I have confirmed that the annual accounts for the Company contained entries in the annual accounts for motor expenses 30 April 2015

– €28,763 and 30 April 2016 – €31,355.

38. It was necessary therefore to examine the make-up of these amounts from the prime records submitted to TAC.”

Assessment for 2015 – €5939

20. The Appeal Commissioner then deals specifically with the €5,939 at paragraphs 39 – 42 of his Determination, and at paragraphs 19 – 21 of the Case Stated.

21. At paragraphs 39 – 42 of the Determination itself, he says:

“39. The table in Appendix A indicates that Mr. Daly was paid €5,939 by cheque in 2015.

40. In summary then we have a picture of what probably occurred in the appeal year 2015. The Appellant has not succeeded in discharging the burden of proof that the payment of €5,939 made to him in 2015 does not amount to an emolument for the director and consequent liability to PAYE/PRSI and USC by the company in 2015.

41. Payment made tax free to a director in the circumstances that the director when using a company car, the cost of its acquisition and running costs having being (sic)

borne by the company, amounts to an emolument in the hands of the director.

42. I have set out in the table attached in Appendix A, the summary of the evidence provided by the Liquidator, in relation to the make-up of the entries in the accounts for the years ended 30th April 2015 and 2016, as they relate to motor expenses payments. These accounts display a payment in 2015 of €5,939 in respect of motor expenses for the director. This evidence is somewhat confusing. Based on the statements provided to me and on my understanding of this evidence, I have concluded bearing in mind the need for fairness and efficiency that this payment is an emolument paid to the director.”

22. At paragraphs 19 – 21 of the Case Stated he states:

“19. I determined that the amount of €5,939 paid to Mr. Daly in 2015 to be an emolument subject to PAYE/PRSI/USC in the year of actual payment – 2015. In doing so I was cognisant of the fact that the amount had been paid to Mr. Daly in 2015 in respect of an amount accrued for 2014.

20. The nominal ledger listing provided in evidence, for the year May 2014 to April 2015 showed a cheque paid to Mr. Daly of €5,939 on 26 February 2015 and analysed as motor expenses in that ledger. The nominal ledger entry showed a separate entry of €4,909.31 in respect of subsistence for Mr. Daly. The payment of €5,939 was made to Mr. Daly in circumstances where he was provided with a car on which all expenses in relation to its running costs were disbursed by the Appellant – Mr. Daly’s employer.

21. The taxation of salary and other payments earned in an earlier year but paid in a later year is provided for in s.985 TCA 1997 as amended. It provides for the deduction of Tax and USC at the time the payment is made in the particular circumstances where Mr. Daly was paid untaxed expenses in 2015 even though accrued from 2014.”

23. The company submits that the Appeal Commissioner made the following errors in his determination in respect of this amount. I have set these out in a different order to how the company deals with them:

(i) The Commissioner states that he examined the “prime records” of the Company but does not identify those prime records;

(ii) The Commissioner refers to a document called “Appendix A” which is not a “prime record”, was compiled without any input from the company, and has no probative value;

(iii) The analysis and findings of the Commissioner in respect of the nominal ledger are factually incorrect in that the nominal ledger did not show a payment by cheque but by direct debit and, contrary to what is stated by the Commissioner, it was not described as mileage expenses but as motor expenses. Related to this is the point that the Commissioner does not identify the evidence which led him to the conclusion that Mr. Daly was paid €5,939 in respect of mileage expenses. The company goes further and contends that no evidence was presented to the Appeal Commissioner which could lead him to the conclusion that the payment was in respect of mileage expenses for the period up to the 30th April 2014. Therefore, it was submitted, the Commissioner could not have come to the

conclusion that he did in respect of the payment of €5,939 to Mr. Daly and there was no basis for the inference that it was “mileage expenses”.

(iv) The Appeal Commissioner states that there is a conflict of evidence between the Company and the Revenue Commissioners but does not identify what conflict of evidence exists.

(v) The specific figure of €5,939 was not identified prior to the appeal hearing and in those circumstances the Commissioner should have adjourned the hearing to conduct an inquiry.

(vi) The Commissioner says at paragraph 40 of his determination that “In summary then we have a picture of what probably occurred in the appeal year 2015. The Appellant has not succeeded in discharging the burden of proof that the payment of €5,939 made to him in 2015 does not amount to an emolument for the director and consequent liability to PAYE/PRSI and USC by the company for 2015”, but does not provide a picture of what probably occurred in respect of the sum of €5,939.

24. For reasons which I will return to, I am satisfied that the Appeal Commissioner erred in failing to identify the “prime records” upon which he based his conclusion (set out at point (i) above). I am also satisfied that the appropriate way of addressing this is to remit the matter to the Tax Appeals Commission. As this applies to both amounts, I will address it later in this judgment. In case I am wrong in relation to this, I will deal with the other points in respect of the €5,939.

25. The company takes issue with the Appeal Commissioner’s reference to what he describes in his Determination as “Appendix A”. The Commissioner says at paragraph 39 “The table in Appendix A indicates that Mr. Daly was paid €5,989 by cheque in 2015.” It was submitted on behalf of the company that this is not a prime record, was compiled without the company’s knowledge or input, and has no probative value.

26. The Appeal Commissioner does not seem to me to claim that it is a prime record or that it has probative value. He does not rely on it to reach his conclusions. That is clear from paragraph 42 of the Determination. Rather it is a document which he produced to explain or summarise his findings. Where it was produced for that purpose and is based on his understanding of the evidence, it is not necessary for him to seek the company’s input

27. At point (iii) the company raises a number of interconnecting points: that the Appeal Commissioner erred in stating that the nominal ledger showed a payment of €5,939 by cheque in respect of “mileage expenses” where it actually showed a payment of that amount by “DD” in respect of “motor expenses”; the Appeal Commissioner failed to identify the evidence which allowed him to conclude that the “motor expenses” meant “mileage expenses”; and in fact there was no evidential basis for the conclusion that they were “mileage expenses”. The significance of this is that not all “motor expenses” are chargeable to tax.

28. I am satisfied that the company has established that the Appeal Commissioner erred in stating that the nominal ledger showed a payment by cheque in that sum. The nominal ledger records “DD” beside the payment, which normally connotes a direct debit payment. However, this does not amount to an error of law which goes to the substance of the determination. The substantive issue is that the payment was made, not the means by which it was made.

29. The real substance of the point at (iii) is the complaint that the Appeal Commissioner did not identify the evidence upon which he reached the conclusion that the €5,939 was in respect of “mileage expenses” rather than “motor expenses” and that there was in fact no such evidence. I disagree. The Commissioner says at paragraph 41 that “Payment made tax free to a director in the circumstances that the director when using a company car, the cost of its acquisition and running costs having being (sic) borne by the company, amounts to an emolument in the hands of the director.” There was no challenge to the

conclusion that the costs of the car’s acquisition and its running costs were borne by the company. The Appeal Commissioner also noted at paragraph 33 that “The witness for the Respondent described the basis of his assessment as being derived from detailed mileage records maintained by Mr. Daly. In evidence he stated: “Mr. Daly kept meticulous records of every trip he made every day, from time leaving to coming back, to the amount of miles and where he went.”” The Appeal Commissioner also noted the evidence of the Revenue Commissioners that Mr. Daly “has calculated the mileage expenses. He has credited his directors current account with these figures to offset against money he owes to the company.” Thus, it seems to me that there was ample evidence upon which he could conclude that “motor expenses” referred to “mileage expenses” and, subject to his failure to identify the prime records upon which he relied, he identified the evidence that he relied upon. The Appeal Commissioner reached the unchallenged conclusion that the cost of acquiring and running the car was borne by the company. It was perfectly reasonable and open to the Appeal Commissioner to be of the view that the “motor expenses” were in respect of mileage in circumstances where the other expenses or costs had been covered by the company.

30. The fourth point raised by the company is that the Appeal Commissioner states that there is a “conflict of evidence” between the company and the Revenue but does not identify what that conflict is. I do not accept this. The Appeal Commissioner clearly states that the conflict is as to whether mileage expenses were paid or not. He states at paragraph 36 of his Determination that “[W]e have therefore, a conflict of evidence in the matter of whether or not the Director Mr. Daly has actually been paid mileage expenses for the periods under appeal.” This refers to the four preceding paragraphs of the Determination. In those paragraphs, the Appeal Commissioner noted that it was agreed by the parties that Mr. Daly used a car owned by the company in the course of carrying out his duties, that the witness for the Revenue presented evidence for the basis of his assessment and outlined that evidence, and that the liquidator disputed this “and stated that there were no payments of mileage expenses in records examined by him.” That is clearly the conflict being referred to by the Commissioner.

31. At point (v), the company argues that the specific amount of €5,939 was not identified prior to the hearing and that the hearing should therefore have been adjourned for the Appeal Commissioner to conduct an inquiry in respect of that amount. The company relies on the statement of Charleton J in Menolly Homes that a tax appeal is “not a plenary civil hearing. It is an enquiry by the Appeal Commissioners as to whether the taxpayer has shown that the relevant tax is not payable.” Charleton J also said at paragraph 22 that the Appeal Commissioners “have the power to summon “any person whom they think able to give evidence before them as respects an assessment made on another person.”” However, the company did not apply for an adjournment, or even suggest that the matter should be adjourned, for this purpose. Indeed, the Appeal Commissioner offered to adjourn the proceedings for other reasons and the liquidator refused that offer. While the Appeal Commissioner has the power to conduct an enquiry and to call any witnesses, in circumstances where the company did not even suggest that the matter should be adjourned for this purpose, it can not now be argued that the Appeal Commissioner erred in not adjourning the hearing

32. Finally, the company claims that while the Appeal Commissioner said “In summary then we have a picture of what probably occurred in the appeal year 2015...” (paragraph 40), he did not provide a picture of what occurred. I accept that the Appeal Commissioner does not state clearly what he found had probably occurred at that point in his Determination. However, the decision has to be read as a whole and the statement clearly refers to the surrounding paragraphs in the Determination.

ASSESSMENT FOR 2016 – €21,008

33. The core of the company’s case in relation to the amount of €21,008 is the contention that the Appeal Commissioner erred in his analysis of the evidence and the figures and gave insufficient weight to two aspects of the evidence in particular. At paragraph 8 of the company’s written submissions, it is submitted that “...the Appeal Commissioner was not correct in law in that the Appeal Commissioner misdirected himself in his analysis and findings of the accounting evidence put before him.” It is helpful to set out the company’s position before dealing with the Determination.

34. The company submitted a Statement of Case and an Updated Statement of Case to the Appeal Commissioner. The latter stated:

“I further have examined the nominal ledger listing for the year ended the 30th April 2016 and have noted that there is a journal entry debited to motor expenses in the amount of €21,008 and the credit for this amount has been posted to accruals. Copy of the nominal ledger listing is attached. From discussions with the company's accountant I understand that the posting of the journal entry was an attempt to update the accruals for unclaimed subsistence and other expenses up to the 30th April 2016. Part of this updating should have been offset by way of reversing accruals and ledger balances due to the directors. This entry was incorrect on two accounts.

Firstly, it incorrectly calculated accumulated sums due to directors and secondly it omitted to reverse the accumulated figures already provided for. For ease of reference I am setting out on attachment 6 how the entries appeared in the accounts of the company for the year ended 30th April 2016. In attachment 7 I am setting out the correct treatment of the entries. The incorrect treatment of the journal amounted to a credit balance due to the directors in total of €18,787 in comparison to the correct credit balance in total of €1,483. The car purchased in the y/e 30/4/15 was sold to the directors in the y/e 30/4/16 by way of offset against the accrual balance (see attachment 4). There was, however, sufficient funds available to the directors to cover the purchase. On the day of the liquidation the director purchased the remaining car and equipment from the company. There were insufficient funds to their credit to pay for these. On the 12/3/2018 Donal Daly made a payment of €14,198 to the liquidator to cover the purchase. (attachment 5).

The difference between the two figures (€18,787 v €1,483) was in effect an overcharge of motor expenses for the year ended 30th April 2016. The company’s corporation tax return for the year ended 30th April 2016 was amended to correct this overcharge. The excess accrual was reversed after the year end. The directors did not benefit from or draw down on this excess.”

35. The original Statement of Case had contained an almost identical statement, though in place of the final paragraph, it stated:

“Furthermore I can confirm having examined the books and records after the 30th April 2016 that the overstatement of the director’s current account balance in the amount of €17,304 was reversed and corrected during that period. The director therefore did not benefit from this error.”

36. Counsel for the company referred me to a number of paragraphs on pages 42–44 of the transcript of the hearing before the Appeal Commissioner (in fact I was referred to pages 83-84 but that seems to have been an error and the correct pages are 42-44). The liquidator said in evidence:

“I refer now to the Revenue assessments with reference, mileage, for the year ended 31st December 2015 in the amount of €20,947 and for the year ended 31st December 2016 in the amount of €5,552, mileage claim January to April 2016. The mileage figure in the amount of €20,947 is based on the 12 months ended 31st December 2015.

I firstly examined the nominal ledge of the company for the year ended 30th April 2015 which covered four months of the calendar year 2015. There is no mileage expense charged in the accounts for the year ended 30th April 2015, attachment three.

As we do not know how much of the figure of €28,947 relates to January to April 2015, we cannot say how much of the balance should now relate to the eight months ended 31st December 2015 to enable us to reconcile it to the nominal ledger listing for that year. Attachment four.

I’ve asked Revenue to reconcile this figure to the nominal ledger but they have failed to do so.

I have further examined the nominal ledger listing for the year ended 30th April 2016 and I’ve noted that there is a journal entry debited to motor expenses in the amount of €21,008 and the credit for this amount has been posted to accruals. Copy of the nominal ledger listing is attached.

From discussions with the company’s accountant, I understand that the posting of the journal entry was an attempt to update the accruals for unclaimed subsistence and other expenses up to 30th April 2016.

Part of this updating should have been offset by way of reversing accruals and ledger balances due to directors. The entry was incorrect on two accounts. Firstly, it incorrectly calculated accumulated sums due to directors and secondly it omitted to reverse the accumulated figures already provided for.

For ease of reference I’m setting out on attachment six how the entries appeared in the accounts of the company for the year ended 30th April and in attachment seven, I’m setting out the correct treatment of those entries.

The incorrect treatment of the journal amounting to a credit balance due to directors in a total €18,787 in comparison to the correct balance, a total of €1,483.

The car purchased in the year ended 30th April 2015 was sold to the directors in the year ended 30th April 2016 by way of offset against the accrual balance. See attachment four.

There was however sufficient funds available to directors to cover the purchase.”

37. These points are also reflected in the written submissions delivered on behalf of the company:

“(e) The true position in respect of accruals is set out in the extract from the nominal ledger headed “ACCRUALS” exhibited at Exhibit 4, page 254. The nominal ledger for 30.04.2016 refers to “Motor Expenses owed” in the amount of €21007.73 (rounded to €21,008) – there is no reference to mileage expenses. The figure of €21,007.73 is one of a number of other accruals totalling €29,617.04. The nominal ledger also indicates that the total debits for the period is €15,500.00 which means that there is a balance owing of €14,117.04 (debits less credits).

(f) The said balance of €14,117.04 was not allocated. The closing balance on the directors current account was NIL (Exhibit 4 page 253).

(g) The Liquidator’s analysis headed “Attachment 6 and 7” (Exhibit 4, pages 258- 59) which he entered in evidence illustrates this. Attachment 6 shows the various amounts due to directors as at 30.04.2016 if the accrued expenses had actually been allocated. The sum of €32,987.00 was sufficient to purchase Mrs. Daly’s car by way of offset for €14,200.00 leaving a credit balance of €18,787.00. Attachment 7 shows that there motor expenses had been over-accrued by €17,304 as at 30.04.2016 and gave the corrected balance due to the directors leaving a credit balance of €1,483.00.

This over-accrual was corrected after 30th April, 2016.

(h) The total on the creditors ledger combined with the correct accruals gives a figure of €15,683.00. Mrs Daly’s purchase of her car for €14,200.00 means that there was a credit of €1483.00 owing to Mr. Daly on the liquidation which was insufficient to purchase his car. This was never drawn down.

(i) Mr. Daly paid the Liquidator in full for the car and did not avail of any offset.

This is evident from the Liquidator’s report to the CRO on Form E4 (Exhibit 4 page 256).

It is submitted that the Appeal Commissioner clearly misdirected himself in his analysis of the figure of €21,008.00 in the company accounts. The said evidence was in oral form (from the Liquidator) and the company accounts which were opened before him. There is no evidence whatsoever that Mr. Daly received €21,008.00 which was chargeable as a mileage expense. The €21,008.00 referred to motor expenses, was not paid to Mr. Daly who purchased the car from the Liquidator for €14,198.00. The maximum which Mr. Daly could have been paid from the liquidation was €1,483.00 after all adjustments and he has not drawn this down.”

38. The Appeal Commissioner deals with the sum of €21,008 at paragraphs 58–

65 of his Determination, in addition to paragraphs 32-38 which are set out above:

“58. Please refer again to the table in Appendix A for an analysis of the make-up of the Company accounts figures in relation to motor expenses for 2016. This table indicates that an amount of €21,008 was accrued in the accounts for 30 April 2016 in respect of mileage expenses due to Mr. Daly.

59. The Liquidator has submitted that

“The accruals on 30th April and creditors at 30th April 2016 in the financial statements amounted to €21,038. That amount was corrected after the year end and reversed. The accrual for the motor expenses was never paid or the incorrect amount of motor expenses wasn’t paid, wasn’t paid to anyone.”

The Liquidator also submitted

“The CT1 that went in on 30th April 2016 showed creditors and accruals of €21,000, it still hadn’t been paid out and the correction was made in the following period after 30th April 2016. No payment whatsoever of expenses to Mr. Donal Daly.”

60. It is certain from the submissions made to TAC and reproduced in evidence by the Liquidator that Mr. Daly cleared his directors account in 2018. The Liquidator submitted to TAC and said at the Appeal Hearing:

“On the day of liquidation, the director purchased the remaining car and equipment from the company. There were insufficient funds to pay for these and on 12th March 2018, Donal Daly made a payment of €14,198 to the Liquidator to cover the purchase of his own car.”

61. If the director Mr. Daly purchased the company assets on 11 November 2016 using a combination of his directors account which included the accrued expenses and an overdrawn current account finally settled in March 2018, then the liability accrued to him by the Company in its accounts for the year ended 30 th April 2016, was discharged on the date of Liquidation 11 November 2016.

62. I have no evidence from either party of adjustments made in the accounts after the year ended 30 April 2016. I have concluded therefore, that these accounts of the company which included an amount of €21,008 accrued, was for the purpose of allocating mileage expenses due for the director. Accordingly, Mr. Daly has been paid untaxed motor expenses albeit perhaps in a different period to that as set out in the Respondent’s assessment.

63. Payment made tax free to a director in the circumstances that the director when using a company car, the cost of its acquisition and running costs having being

(sic) borne by the company, amounts to an emolument in the hands of the director.

64. The Appellant has not succeeded in discharging the burden of proof that the accrued liability in the directors current account was not included as an expense item in the profit and loss accounts of the company. The Appellant has not succeeded in discharging the burden of proof that the accrued expenses have not been paid or discharged to the director. Consequently, the Appellant has not proved that the amount so, (sic) accrued does not amount to an emolument for the director and consequent liability to PAYE/PRSI and USC by the company for 2016.

65. I have set out in the table attached in Appendix A the summary of the submissions and evidence provided by the Liquidator in relation to the make-up of the entries in the accounts for the years ended 30th April 2015 and 2016. These accounts display an accrual of €21,008 in 2016 in respect of motor expenses for the director. This evidence is somewhat confusing. Based on the statements provided to me and on my understanding of this evidence, I have concluded, bearing in mind the need for fairness and efficiency, that the net amount of €21,008 accrued in the accounts for the year to 30 April 2016 and discharged as above is an emolument paid to the director.”

39. He also deals with his determination in respect of the €21,008 at paragraphs

22 – 25 of the Case Stated. He states:

“22. I determined that the amount of €21,008 accrued as expenses and as due to Mr. Daly, in the Appellant’s accounts for the year ended 30 April 2016, to be an emolument subject to PAYE/PRSI/USC in the year of actual payment – 2016. In doing so I was cognisant of the fact that the amount had been disbursed by a contra entry to Mr. Daly in November 2016 in respect of an amount accrued for the year ended

30 April 2016.

23. The nominal ledger listing provided in evidence, for the year May 2015 to April 2016 showed an accrual for Mr. Daly of €21,008 analysed as motor expenses in that ledger. The Respondent’s witness provided evidence of Mr. Daly keeping meticulous records of every trip he made and the number of miles incurred. No evidence was adduced to suggest that this amount included any sum in respect of subsistence for Mr. Daly. The amount due to Mr. Daly €21,008 was paid or disbursed to him by a contra entry in his director’s current account on the date of liquidation on 11 November 2016. The Liquidator submitted to TAC and said at the Appeal Hearing:

“On the day of liquidation, the director purchased the remaining car and equipment from the company. There were insufficient funds to pay for these and on 12th March 2018, Donal Daly made a payment of €14,198 to the Liquidator to cover the purchase of his own car.”

24. I concluded from this that the amount accrued to Mr. Daly was cleared by the contra entry in his director’s current account on 11 November 2016. The resulting overdrawn current account was eventually discharged by Mr. Daly in March 2018.

This payment or disbursement was made to Mr. Daly in circumstances where he was provided with a car on which all expenses in relation to its running costs were disbursed by the Appellant – Mr. Daly’s employer.

25. The Income Tax (Employment)(Consolidated) Regulations, 2001 apply to an employer who makes a payment of emoluments. Section 112 provides that ‘emoluments’ means anything assessable to income tax under Schedule E. A similar meaning of emoluments is provided in s.983 TCA 1997 (within Chapter 4, Part 42 – Collection and recovery of income tax on certain emoluments (PAYE system). Tax on emoluments if deducted and remitted by the employer on the making of a payment of emoluments.”

40. Against that context, the company claims that the Appeal Commissioner erred in the following respects. These are set out in the company’s notice of appeal and in the company’s written and oral submissions. Some of the points raised in the notice of appeal were not pursued. The alleged errors identified by the company are:

(i) The company says that the Appeal Commissioner’s analysis and findings are wrong and that he misdirected himself in respect of the evidence; in particular that he gave insufficient weight to two parts of the evidence. This, along with the next two points is the core of the company’s case in relation to the €21,008.

(ii) It is contended that the Appeal Commissioner would not have arrived at the

conclusion at paragraphs 60 and 61 of the Determination if he had properly instructed himself on the accounting treatment.

(iii) He incorrectly stated in his Determination that the Company has not succeeded in discharging the burden of proof that (a) the accrued liability in the directors current account was not included as an expense item in the profit and loss accounts of the Company, and (b) the accrued expenses have not been paid or discharged to Mr. Daly.

(iv) The liquidator tried to adduce evidence (the general ledger) of the reversal of accrual in that period but he was unable to do so due to an objection by the Revenue Commissioners.

(v) He referred to Appendix A to his determination.

(vi) While there is an accrual of €21,007.73 recorded in the nominal ledger, this is described as “motor expenses” and not “mileage expenses”. Therefore, there was no basis for the Appeal Commissioner’s conclusion that the amount was in respect of “mileage expenses”.

(vii) The Company says that it is not sufficient for the Commissioner to say, as he does at paragraph 61 of his Determination: “If the director purchased the company assets on 11 November 2016 using a combination of his directors account which included the accrued expenses and an overdrawn current account finally settled in March 2018 then the liability accrued to him by the Company in

its accounts for the year ended 30th April 2016 was discharged on the date of the Liquidation 11 November 2016” [emphasis added];

(viii) There is no evidence that Mr. Daly benefitted from the accrual because the directors current account does not show a transfer to that account on the 30th April 2016.

41. In my view, the core of the company’s case in relation to this amount (points (i), (ii) and (iii)) suffers from the following fatal flaw. This applies to the amount of €5939 also. As previously discussed, the company did not adduce any evidence from Mr. Donal Daly despite him being the person who the Revenue had assessed as having received the benefit of the amounts. At the commencement of the hearing, counsel for the Revenue took issue with the fact that Mr. Daly would not be giving evidence and that the liquidator proposed giving evidence as to matters which had occurred before his appointment. The liquidator was offered an adjournment to bring Mr. Daly as a witness and he declined, saying that “Not at this point because I don’t think he is an informed witness from the point of view of what went on...” The failure to adduce any evidence from Mr. Daly is particularly striking in circumstances where the Revenue’s assessment was based on information provided by Mr. Daly. Part of the liquidator’s explanation for declining the offer of an adjournment was that Ms. Grayson was in attendance to give evidence and that she was the “bookkeeper”. He also said “The best person to assess what went on in the books and records is the account keeper Annette Gayson (sic). Annette is the daughter of Mr. Daly. She handled all the financial matters of the company.” However, when Ms. Grayson was called to give evidence, she dealt solely with an assessment based on mileage claims and payments to her and did not deal with any other aspect. Finally, in his evidence to the Appeal Commissioner, the liquidator said “From discussions with the company’s accountant, I understand that the posting of the journal entry was an attempt to update the accruals for unclaimed subsistence and other expenses up to 30th April 2016.” The company’s accountant was not called to give evidence. It is very possible that the liquidator was referring to Ms. Grayson because later in the hearing he was asked what Ms. Grayson’s capacity was within the company and he answered that “[S]he was the previous accountant.” If this is the case, it is

even more significant that Ms. Grayson did not deal with these amounts, or with how they were treated by the company, in her evidence.

42. In those circumstances, the liquidator’s evidence was based solely on what he deduced from the records of the company and what he was told by a person who did not give evidence or at least did not give evidence on the point. While the Revenue objected to this, the Appeal Commissioner did not treat this as inadmissible. Thus, he took account of this evidence. Indeed, this is clear from his Determination. He was not, however, satisfied that it was sufficient to discharge the burden of proof on the company. I am satisfied that the company has not discharged the burden of proof of showing that the Appeal Commissioner acted unreasonably in reaching that conclusion. There was material before the Appeal Commissioner – the nominal ledger, Mr Daly’s records – upon which he could reasonably conclude that the sum of €21,008 was paid in respect of mileage expenses. It seems to me that if the company wished to establish that there was an error in the nominal ledger, or that there was no payment to Mr. Daly, or that it was not for “mileage expenses”, that could have been established through evidence from the parties who were directly involved and who had knowledge of same, Mr. Daly, Ms. Grayson and, if different, the company’s accountant. There will be cases where a decision-maker may have to determine a matter on the basis of imperfect evidence but, as a first step, there must be some explanation as to why the best evidence is not available. In this case, there was no explanation given as to why Mr. Daly did not give evidence, or why Ms. Grayson did not give evidence on these matters after it was indicated that she was in a position to do so, or why the company’s accountant was not called to give evidence.

43. In my view, in the absence of that evidence without any explanation, the company has not discharged the burden of proof on this appeal.

44. In case I am wrong on this, I will address the other points made on behalf of the company.

45. The liquidator says that the “Commissioner erred in not allowing the Appellant to introduce the evidence” in relation to the reversal of accrual. In fact what happened was that after the Revenue raised an objection to the evidence, the Commissioner said to the liquidator “what we will do is, if you can see if we can reintroduce it in the afternoon or at a later stage” and the liquidator said “Well okay. I’ll have to annotate it because there’s ---Annette and Todd Fitzgerald are very acquainted anyway and there is other contents in the email that’s the reason why”. Counsel for the Revenue repeated their objection and the liquidator simply said “Okay, so we won’t have it. It’s fine. Do you want me to go into the next part of the appeal.” The Commissioner said “It’s your appeal” and the liquidator said “Okay, so that’s pretty much where I stand on the PAYE.” Thus, the Appeal Commissioner did not disallow the liquidator from adducing the evidence.

46. I have previously dealt with the Appeal Commissioner’s reference to “Appendix A”. It is not necessary to repeat what I say at paragraphs [Insert] above.

47. I have also dealt with the Commissioner’s conclusion that the references to “motor expenses” meant “mileage expenses” and the basis for that conclusion. Again, it is not necessary to repeat what I said.

48. At point (iv), the company claims that it was insufficient for the Commissioner to say “If the director purchased the company assets on 11 November 2016 using a combination of his directors account which included the accrued expenses and an overdrawn current account finally settled in March 2018 then the liability accrued to him by the Company in its accounts for the year ended 30th April 2016 was discharged on the date of the Liquidation 11 November 2016...” because the use of the conditional “If the director...” means there was no finding. It seems to me that the Commissioner was simply reflecting what was said by the liquidator and indicating what conclusion he was drawing from that, on the assumption that it was correct.

49. Thus, I am not satisfied that the Appeal Commissioner erred in any of these respects.

ERROR

50. However, as noted above, at paragraph 37 of the Determination, the Appeal Commissioner stated that he had examined the “nominal ledger entries from books of first entry...” and confirmed that the annual accounts contained entries for motor expenses up to 30th April 2015 and 30th April 2016. These were significantly higher than the €5,939 and €21,008. At paragraph 38 he said that it was therefore necessary “...to examine the make-up of these amounts from the prime records submitted to TAC.” For present purposes, the important thing is that while the Appeal Commissioner says that he had to have regard to the “prime records” of the company to reach his conclusions, he does not identify what “prime records” he had regard to or what in those records led him to this conclusion. He obviously refers to the nominal ledger but it is my understanding that the nominal ledger is not a prime record. Indeed, the Appeal Commissioner was clearly of this view also because he differentiates between the nominal ledger and the prime records. Unfortunately, he then does not identify what records he relied upon in reaching his conclusion. It is important to note that there may be an inconsistency between the Determination and the Case Stated on this point. In paragraph 38 of the Determination, the Appeal Commissioner clearly states that he had to have regard to the “prime records”. In paragraph 20 of the Case Stated, however, he appears to base his conclusion that the €5,939 was paid as mileage expenses on the nominal ledger. To the extent that there is any inconsistency, it seems to me that the Determination has to take precedence over the Case Stated.

51. It is also important to note that the Appeal Commissioner approached the issue correctly in the sense that he identified that the burden of proof was on the company and concluded that it had not discharged that burden of showing that the payments were not made to Mr. Daly and do not amount to emoluments and it was on that basis that he then determined that the payments were an emolument. However, the company is still entitled to know the evidence which the Appeal Commissioner relied on in reaching the conclusion that it had failed to discharge the burden of proof. Perhaps more importantly, the Court in being asked for its opinion as to whether the Commissioner was correct in law must know the evidence upon which the Appeal Commissioner’s conclusion is based.

52. Where the conclusion is stated to be based on evidence but that evidence is not identified, it is not possible to conclude that the Appeal Commissioner was correct or incorrect.

53. In my view, the correct way to address this particular issue is to remit the matter back to the Appeal Commissioner. Section 949AR of the 1997 Act provides that the Court may, inter alia, reverse, affirm or amend the Determination of the Commissioner or may remit the matter to the Commissioner with its opinion on the Determination. In circumstances where I have given my opinion on the other points raised by the company it will be a matter for the Appeal Commissioner to decide whether to reconsider the matter or issue a revised determination.