Revenue Commissioners v Getty Images International ULC (Approved)

Factual and Procedural Background

These proceedings arise from a case stated pursuant to section 949AQ of the Taxes Consolidation Act 1997 ("the TCA 1997") following an appeal by the Appellant, the Revenue Commissioners ("Revenue"), against determinations made by the Tax Appeals Commissioner ("the Commissioner"). The Respondent ("Getty") had appealed Notices of Determination issued by Revenue concerning deductions for foreign royalty withholding tax ("RWHT") in Getty's tax returns for the years ended 31 December 2015 and 31 December 2018.

Getty's business involves licensing a large database of digital media to customers across more than 100 foreign jurisdictions, many of which deduct foreign RWHT at source. Getty treated foreign RWHT as a deductible expense in its tax calculations for 2015, 2017, and 2018, but not for 2016. In 2019, Getty submitted a voluntary qualifying disclosure regarding the inconsistent treatment of foreign RWHT, which Revenue refused to accept for 2016 and issued Notices of Determination for 2015 and 2018.

The appeals were consolidated and heard by the Commissioner, who determined that Getty was entitled to treat foreign RWHT as a deductible expense under section 81 of the TCA 1997, contrary to Revenue's position. Dissatisfied with this determination, Revenue requested the Commissioner to state a case for the opinion of the High Court on points of law arising from the determination. Revenue further sought amendments to the case stated and inclusion of the hearing transcript.

Legal Issues Presented

1. Did the Commissioner err in law in determining that foreign RWHT suffered by the Appellant is deductible under section 81 TCA 1997?
2. Did the Commissioner err in law in determining that there is no general principle denying a deduction for costs, including taxes, under section 81 TCA 1997 where those costs are not calculated after the ascertainment of profit?
3. Did the Commissioner err in fact and/or law in proceeding to determine deductibility under section 81 on the basis that the Appellant was not entitled to a credit or deduction for foreign RWHT under Part 35 and Schedule 24 TCA 1997 and/or section 77(6B) TCA 1997?
4. Did the Commissioner err in law in interpreting section 81 as permitting a deduction of foreign RWHT as an alternative or complementary relief to Part 35, Schedule 24, and section 77(6B) TCA 1997?
5. Did the Commissioner err in law in failing to attach significance to section 76A TCA 1997 and expert accounting evidence adduced during the appeal?
6. Was there any, or sufficient, evidence before the Commissioner to support specific findings of fact, or did the Commissioner draw inferences from primary facts which no reasonable Commissioner could have drawn? Specifically:
1. The findings that the Appellant could not avail of credit or deduction for foreign RWHT and was not in a position to derive benefit from double taxation relief under Schedule 24.
2. The finding that foreign RWHT is one of the costs of doing business for all providers of licensed intellectual property to customers in certain countries.
3. The finding that it was not possible for the Appellant to trade in jurisdictions imposing foreign RWHT without incurring that tax.

Arguments of the Parties

Appellant's Arguments

• The court has inherent jurisdiction to amend a case stated, which should be exercised in this case to include all points of law properly identified in Revenue's notice of dissatisfaction.
• It is the appellant's role to formulate the grounds of appeal, and it is inappropriate for the respondent to influence or amend these grounds.
• The points of law identified in Revenue's original notice, including challenges to findings of fact, should be fully reflected in the case stated.
• The inclusion of the hearing transcript with the case stated is appropriate due to the challenge that some findings lack evidential basis.
• The amendments sought to certain questions in the case stated, including the addition of a question challenging specific findings of fact, are necessary to properly frame the appeal.

Respondent's Arguments

• The court has jurisdiction to amend a case stated but the amendments sought by the Appellant are inappropriate and represent an impermissible expansion of grounds of appeal.
• The additional ground of appeal regarding findings of fact was properly rejected by the Commissioner as vague and lacking specificity.
• Revenue has failed to clearly identify whether it challenges findings of fact or inferences, which disentitles it from seeking the amendments.
• Some findings Revenue seeks to challenge were not in dispute during the appeal and cannot be properly appealed.
• No necessity exists to include the hearing transcript as Revenue has not identified relevant portions or demonstrated their necessity for resolving the legal questions.
• The amendments to questions III and IV are unnecessary, as the existing wording sufficiently reflects the statutory context and the issues in dispute.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged that it has jurisdiction to amend a case stated under section 949AR(2) TCA 1997 and that this jurisdiction is properly exercised in cases where the Appeal Commissioner has omitted to include points of law properly identified by the appellant in the notice under section 949AP(2). It accepted that the appellant bears primary responsibility for identifying grounds of appeal and that the Commissioner drafts the case stated, including reformulating questions for clarity, but must not exclude proper points of law or expand grounds of appeal.

The court found that the Commissioner erred in omitting to include an additional question challenging certain findings of fact or inferences which the appellant had properly identified in its notice. The court accepted the appellant’s explanation that the evolving formulations of this ground of appeal did not amount to an impermissible expansion.

The court rejected the respondent’s argument that the appellant failed to specify whether it challenged findings of fact or inferences, noting it is permissible to plead these in the alternative. It also found that the appellant had sufficiently identified the particular findings and/or inferences at issue, despite the absence of specific transcript references.

The court declined to include a question challenging the finding that the appellant was not entitled to relief under Schedule 24 or section 77(6B) because that finding was undisputed and did not preclude the appellant’s other legal arguments.

It agreed that one of the factual findings—regarding the impossibility of trading in certain jurisdictions without incurring foreign RWHT—was properly challenged and should be included as a point of law for determination.

Regarding the inclusion of the hearing transcript, the court recognized that this is exceptional and only appropriate where the absence of evidence is alleged. Since the appellant sought to challenge a finding of fact on evidential grounds, relevant portions of the transcript should be included. However, the court declined to include the entire three-day transcript and remitted the case stated to the Commissioner to determine which portions are relevant.

The court rejected the appellant’s late attempt to include transcript portions related to a purely legal question (question V), finding this to be an impermissible expansion of grounds.

Finally, the court found no error of law in the Commissioner’s amendments to questions III and IV, which added statutory context and clarity. It held that it is proper for the Commissioner to consider respondent’s representations on the draft case stated and to modify questions accordingly, provided the core points of law remain intact.

Holding and Implications

The court’s final determinations were as follows:

• The application to amend questions III and IV of the case stated is REFUSED.
• The application to amend the case stated by including additional questions challenging findings of fact at subparagraphs VI(i) and VI(ii) is REFUSED.
• The application to amend the case stated by including an additional question challenging the finding that it was not possible to trade in certain jurisdictions without incurring foreign RWHT (subparagraph VI(iii)) is GRANTED.
• The case stated is REMITTED to the Commissioner pursuant to section 949AR(2) of the TCA 1997 to determine and include relevant portions of the hearing transcript necessary for the amended question.

The direct effect of this decision is to refine the scope of the appeal to the High Court, ensuring that all properly identified points of law are included without expanding or altering the grounds of appeal beyond what was originally notified. The court did not set any new precedent but clarified procedural standards regarding the formulation and amendment of cases stated under the TCA 1997.