Chapter III

Anti-avoidance

19. — Section 80 of the Income Tax Act, 1967 , is hereby amended—

(a) by the insertion after “lessor” in the definition of “premium” in subsection (1) of “or to a person connected with the immediate or superior lessor”,

(b) by the substitution for subsection (2) of the following subsection:

“(2) (a) In ascertaining, for the purposes of this Chapter, the duration of a lease, the following provisions shall have effect:

(i) where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstances render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease and the premium was not substantially greater than it would have been (on the assumptions required by paragraph (b)) if the term had been one expiring on that date, the lease shall not be treated as having been granted for a term longer than one ending on that date, and

(ii) where the terms of the lease include provision for the extension of the lease beyond a given date by notice given by the lessee, account may be taken of any circumstances making it likely that the lease will be so extended, and

(iii) where the lessee, or a person connected with him, is or may become entitled to a further lease or the grant of a further lease (whenever commencing) of the same premises or of premises including the whole or part of the same premises, the term of the lease may be treated as not expiring before the term of the further lease.

(b) Paragraph (a) shall be applied by reference to the facts which were known or ascertainable at the time of the grant of the lease, or, in relation to tax under section 83 (4), at the time when the contract providing for a variation or waiver of a kind referred to in the said section 83 (4) is entered into; and in applying the said paragraph (a)—

(i) it shall be assumed that all parties concerned, whatever their relationship, act as they would act if they were at arm's length; and

(ii) if, by the lease or in connection with the granting of it—

(I) benefits were conferred other than vacant possession and beneficial occupation of the premises or the right to receive rent at a reasonable commercial rate in respect of them, or

(II) payments were made which would not be expected to be made by parties so acting if no other benefits had been so conferred,

it shall be further assumed, unless it is shown that the benefits were not conferred or the payments made for the purpose of securing a tax advantage in the application of this Chapter, that the benefits would not have been conferred nor the payments made had the lease been for a term ending on the date mentioned in paragraph (a).”, and

(c) by the insertion after subsection (4) of the following subsection:

“(5) Where an inspector has reason to believe that a person has information relevant to the ascertainment of the duration of a lease in accordance with the preceding provisions of this section, the inspector may by notice in writing require him to give, within twenty-one days after the date of the notice or such longer period as the inspector may allow, such information relevant to the ascertainment of the duration of the lease on the matters specified in the notice as is in his possession.”,

and the definition of premium in the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

“premium” includes any like sum, whether payable to the immediate or a superior lessor or to a person connected with the immediate or superior lessor;

20. — Section 83 of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution for subsection (6) of the following subsection:

“(6) If an amount by reference to which a person is chargeable to tax by virtue of this section is payable by instalments, the tax chargeable may, if the person chargeable satisfies the Revenue Commissioners that he would otherwise suffer undue hardship, be paid at his option by such instalments as the Commissioners may allow over a period not exceeding eight years and ending not later than the time at which the last of the first-mentioned instalments is payable.”,

(b) by the substitution for subsection (8) of the following subsection:

“(8) Where subparagraph (iii) of section 80 (2) (a) applies, the premium, or an appropriate part of the premium, payable for or in connection with any lease mentioned in that subparagraph may be treated as having been required under any other lease.”, and

(c) by the insertion after subsection (8) of the following subsection:

“(9) Reference in this section to a sum shall be construed as including the value of any consideration, and references to a sum paid or payable or to the payment of a sum shall be construed accordingly.”.

21. —(1) Where it appears to the inspector that the determination of any amount on which a person may be chargeable to tax by virtue of section 83 , 84 or 85 of the Income Tax Act, 1967 , may affect the liability to tax of other persons, he shall give notice in writing to those persons as well as to the first-mentioned person of the determination he proposes to make and of the rights conferred on them by this section.

(2) Any person to whom such a notice is given may, within twenty-one days after the date on which it is given, object to the proposed determination by notice in writing given to the inspector:

Provided that section 416 (7) of the Income Tax Act, 1967 , shall apply, with any necessary modifications, in relation to any such notice as it applies in relation to a notice of appeal under the said section 416.

(3) Where notices have been given under subsection (1) and no notice of objection is duly given under subsection (2), the inspector shall make the determination as proposed in his notices and the determination shall not be called in question in any proceedings:

Provided that this subsection shall not operate to prevent any person to whom notice has not been given under subsection (1) from appealing against any such determination of the inspector which may affect that person's liability to tax.

(4) Where a notice of objection is duly given, the amount mentioned in subsection (1) shall be determined in like manner as an appeal and shall be so determined by the Appeal Commissioners.

(5) All persons to whom notices have been given under subsection (1) may take part in any proceedings under subsection (4) and in any appeal arising out of those proceedings and shall be bound by the determination made in the proceedings or on appeal, whether or not they have taken part in the proceedings, and their successors in title shall also be so bound.

(6) A notice under subsection (1) may, notwithstanding any obligation as to secrecy or other restriction on the disclosure of information, include a statement of the grounds on which the inspector proposes to make the determination.

(7) An inspector may by notice in writing require any person to give, within twenty-one days after the date of the notice or within such longer period as the inspector may allow, such information as appears to the inspector to be required for deciding whether to give a notice under subsection (1) to any person.

(8) In this section “tax” means income tax or corporation profits tax, as may be appropriate.

22. —(1) Part I of the Second Schedule shall have effect for the purpose of supplementing sections 19 to 21 and this section.

(2) The enactment mentioned in column (2) of Part II of the Second Schedule is hereby amended to the extent specified in column (3) of that Part.

(3) The enactment mentioned in column (2) of Part III of the Second Schedule is hereby repealed to the extent specified in column (3) of that Part.