Whether Revenue was justified in refusing access to records relating to an audit and ensuing Notice of Amended Assessment seeking payment of corporation tax from the Company

9 August 2021

Background

Transfer pricing describes the process by which parties to a transaction set a price at which they pass goods, services, finance, assets or anything else of commercial value between each other. Ireland's transfer pricing legislation applies the arm's length principle which means, in general, that transactions between related parties must be priced as if they were carried out between unrelated parties. In September 2018, following a particular transfer pricing audit, the applicant received a Notice of Amended Assessment (the Notice) from Revenue seeking payment of corporation tax for certain accounting periods. This review is concerned with Appendix 2 to the applicant’s letter to Revenue of 27 September 2019, which sought access to seven categories of record relating to the audit and the Notice. The applicant subsequently clarified that it was not seeking access to correspondence between it and Revenue but that its request encompassed any information that Revenue had obtained from various publicly available websites.

Revenue’s International Tax Division (ITD) and Large Cases Division (LCD) issued decisions on the request. The ITD issued its decision on 15 January 2020 in which it refused access to 85 records under sections 30(1)(a), 33(1)(d), 35(1)(a), and 41(1)(a) of the FOI Act. In its decision of 16 January 2020, the LCD identified 115 relevant records, of which it released 25 in full and nine in part. It withheld the remaining records and parts of records under sections 29(1), 30(1)(a), 30(1)(c), 31(1)(a), and 41(1)(a).

The applicant sought an internal review of Revenue’s decision on 5 February 2020, including in relation to the number of records identified by the ITD. On 26 February 2020, the ITD said in its internal review decision that it was satisfied from its searches that only 85 records were relevant to the request, which, in essence, was a finding that section 15(1)(a) applied. Otherwise, it affirmed its substantive decision on the 85 records although it varied the extent to which it was relying on the exemptions listed earlier. On the same date, the LCD issued its internal review decision in which it released three further records in full or in part. It otherwise affirmed its substantive decision on the request although it also varied the extent to which it was relying on the exemptions claimed, and also relied on section 15(2)(b). On 19 August 2020, the applicant sought a review of the matter by this Office.

I have now completed my review in accordance with section 22(2) of the FOI Act and I have decided to conclude it by way of a formal, binding decision. In carrying out my review, I have had regard to the above exchanges, to correspondence between this Office, Revenue and the applicant (including a letter sent by this Office’s Investigator to the applicant on 15 June 2021, to which no reply has been received) and to the provisions of the FOI Act.

Scope of the Review

This review is confined to whether or not Revenue's refusal to fully grant the applicant’s request for access to records, as held by the LCD and ITD, was justified. It will also examine whether Revenue was justified in essentially relying on section 15(1)(a) in relation to further records held by the ITD.

Preliminary Matters

There are a number of preliminary matters that I wish to address at the outset.

First, section 13(4) of the Act provides that in deciding whether to grant or refuse a request, any reason that the requester gives for the request shall be disregarded. This means that I cannot have regard to the applicant's motives for seeking access to the information in question, except in so far as those motives reflect what might be regarded as public interest factors in favour of release of the information where the Act requires a consideration of the public interest (not relevant in this case).

Secondly, section 18 of the FOI Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed. This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading. However, the Commissioner takes the view that neither the definition of a record nor the provisions of section 18 envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, the Commissioner is not in favour of the cutting or "dissecting" of records to such an extent.

Thirdly, section 25(3) of the FOI act requires me to take all reasonable precautions in the course of a review to prevent the disclosure of information contained in an exempt record or that would cause the record to be exempt if it contained that information.

Finally, it is also important to note that release of records under the FOI Act is regarded, in effect, as release to the world at large given that the Act places no restrictions on the uses to which records released under FOI may be put. In contrast, in the case of a court order for discovery for instance, records are released subject to an undertaking that they are to be utilised solely for the purposes of the legal proceedings in question; no further use or passing-on is allowed.

Analysis and Findings

Section 15(1)(a) – whether reasonable searches conducted

Section 15(1)(a) of the FOI Act provides that access to records may be refused if the records concerned do not exist or cannot be found after all reasonable steps to ascertain their whereabouts have been taken. The role of the Commissioner in a case involving section 15(1)(a) is to decide whether the decision maker has had regard to all of the relevant evidence and, if so, whether the decision maker was justified in coming to the decision that the records do not exist or cannot be found after all reasonable steps to ascertain their whereabouts have been taken.

The Investigator’s letter of 15 June 2021 set out Revenue’s description of how the relevant branch within the ITD stores, and searched for, records covered by the request. I see no need to repeat those details here. The Investigator also told the applicant of Revenue’s position that the other branches within the ITD, which are concerned with other work, confirmed that they do not hold relevant records.

Having considered Revenue’s submission, and in the absence of comment from the applicant, I see no reason to question further the steps taken by the ITD to search for records covered by the request. I am satisfied that Revenue has taken all reasonable steps to ascertain the whereabouts of such records. I find that section 15(1)(a) of the FOI Act applies.

Section 41(1)(a) – disclosure prohibited by an enactment

Revenue withheld some of the records under section 41(1)(a) of the FOI Act on the basis that they contain information covered by the prohibition on disclosure in section 851A of the Taxes Consolidation Act 1997 (the TCA).

S41(1)(a) requires the refusal of a record the disclosure of which is prohibited by law of the European Union or any enactment, other than a provision specified in column (3) in Part 1 or 2 of Schedule 3 of an enactment specified in that Schedule. Generally speaking, section 851A(1) of the Taxes Consolidation Act 1997 (the TCA) defines taxpayer information as information of any kind and in any form relating to one or more persons that is obtained by a Revenue Officer or for the purposes of the Acts, purportedly for the purposes of the Acts or prepared from information so obtained, but does not include information that does not directly or indirectly reveal the identity of the person to whom it relates. Section 851A(2) provides that all taxpayer information held by Revenue or a Revenue Officer is confidential and may only be disclosed in accordance with section 851A or as is otherwise provided for by any other statutory provision. Section 851A of the TCA is not listed in Schedule 3 to the FOI Act, which excludes certain enactments from the application of section 41 of the FOI Act.

In general, I accept that taxpayer information relating to any party, including information that directly or indirectly reveals the identity of the party to whom it relates, is covered by the requirements of section 851A of the TCA. In turn and again in general, I accept that section 41(1)(a) of the FOI Act applies to taxpayer information insofar as it relates to a party other than a requester.

The applicant’s submissions say that it is not apparent why the records would contain taxpayer information about third parties. It notes that Revenue’s decisions refer to “information” rather than “taxpayer information”. It says it is unlikely that release of the records is prohibited by law given that it was the subject of the audit and the records relate to it. It says that any third party taxpayer information that may be contained in the relevant records could be redacted in any event, and that it is a matter for the Company to decide whether the resulting records contain sufficient information to be useful. It says that it has been materially affected by the Revenue’s decisions on its FOI request and therefore has a material interest in the records. It says that there is considerable public interest in disclosure of the records, given the quantum of the amount of taxes payable and the importance of tax certainty to all taxpayers. It says that they should be released in the interests of transparency and accountability of an FOI body. 

The Investigator’s letter of 15 June 2021 said that, further to information in the released records and elsewhere (as specified in her letter to the applicant), she understood the Notice to concern the application of a transfer pricing policy to transfers between the applicant and related parties. She invited the applicant’s comments in relation to whether, in such circumstances, all of the withheld records could be considered exempt under section 41(1)(a), on the basis that they contain taxpayer information relating to the applicant that is inextricably linked to taxpayer information relating to other companies. She also referred the applicant to this Office’s decision in Case No. OIC-53437 (https://www.oic.ie/decisions/company-x-and-the-office-1/index.xml), which concerned similar circumstances. That decision found section 35(1)(b) to apply to the requested records further to the provisions of section 851A of the TCA and noted that section 41(1)(a) would also be relevant. As referred to earlier, no response has been received from the applicant.

I have already explained that I cannot have regard to the applicant’s reasons for seeking the records. In the circumstances set out above, and particularly where the Notice concerns the application of a transfer pricing policy to transfers between the applicant and related parties, I am satisfied that all of the withheld records contain taxpayer information relating to the applicant and those other parties. I am also satisfied that taxpayer information relating to the applicant cannot be separated from taxpayer information relating to the other parties as contained in the records. Accordingly, I am of the view that it is not possible to provide the applicant with redacted copies of the records further to section 18 of the FOI Act. Furthermore, I accept that the third party taxpayer information may only be disclosed in accordance with section 851A of the TCA or as is otherwise provided for by any other statutory provision. Having regard to all of the foregoing, I find that section 41(1)(a) of the FOI Act applies to all of the withheld records. Section 41(1)(a) does not require the consideration of the public interest and in the circumstances, I cannot have regard to the applicant’s arguments in relation to such matters.

Further to the above findings, there is no need for me to consider any of the other exemptions relied on by Revenue in this case, including whether the applicant is entitled to access to copies of records sourced by Revenue from publicly available sources.

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby affirm Revenue’s decision on Appendix 2 to the applicant’s letter to Revenue of 27 September 2019 under sections 15(1)(a) and 41(1)(a) of the FOI Act.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Stephen Rafferty

Senior Investigator