A businessman is seeking to overturn a Revenue opinion notice which stated a complex financial transaction involving a tax advantage of €2.18 million to him was a tax avoidance transaction.

Anthony Donlon has brought High Court proceedings over the Revenue’s treatment of the transaction, alleging its imposition of a tax liability on him amounts to an unjust attack on his constitutionally protected property rights.

The Revenue had last November issued a Notice of Opinion, under Section 811 of the Taxes Consolidation Act, in respect of transactions lawfully entered into by Mr Donlon in late 2007.

The notice expressed the view the transactions constituted a tax avoidance transaction with a total tax advantage of €2.18 million accruing to Mr Donlon.

Similar arrangements

The Revenue had identified a number of cases in which identical or very similar arrangements were concluded via a London-based merchant bank, Schroders Co Ltd, and it referred to those as the “Schroders Ready-Made 26”.

Mr Donlon, who appealed the opinion to Revenue, claims the two transactions involved Schroders Co and he had made a loss on one transaction and a profit on the other.

He claims the profit was exempt from tax and he deducted his loss when computing chargeable gains for his 2007 tax return.

In his action against the Revenue Commissioners, Ireland and the Attorney General, Mr Donlon, Claughan House, Lower Church Road, Raheen, Limerick, wants the notice of opinion of November 26th last quashed.

Tax avoidance schemes

He is also challenging the constitutionality of Section 811, which gives the Revenue certain powers in relation to tax avoidance schemes or transactions and enables it, subject to appeal, to reverse or set at naught the effect of certain tax arrangements.

Leave to bring the challenge was granted, on an ex-parte (one side only represented) basis, by Mr Justice Michael Peart who returned the matter to April.