Mr. Paul Walsh:

When this matter was raised the Revenue legislative service gave its advice to the south west region on the correct tax treatment. We were satisfied that the value that the farmers received on the issuing of the shares gave rise to a income tax charge. Farmers who settle with us on the basis of this advice will not be disadvantaged should a case go before the Tax Appeals Commission and a different result emerge.

We are satisfied there is tax due in this regard. We have had meetings with the Institute of Taxation and other tax agents on the matter. At no point has anybody come up with a technical analysis to the effect that this charge does not stand up or is not technically correct. They have argued about the 60 days, 21 days, the interest, the penalties and so on but they have not engaged with us at any point to the effect that the tax technical position is incorrect.

In regard to the Deputy's question regarding the position regarding non-monetary benefit versus cash, I refer him to the UK case law in this regard which dates back to 1904. It is well established that where a person gets value for providing a service that value must be assessed. In the vast majority of cases, the value will be cash based but where a person gets other than cash - a non-monetary benefit - the non-monetary benefit must be taxed at the market value. It has been established in recent times that shares have a value greater than the cost base and that is the value on which we seek to obtain income tax.

In regard to capital gains tax, when the shares are ultimately sold CGT is the correct computation but the base cost will be the market value which the taxpayer has paid income tax on. The difference between that market value and the ultimate sale price will then be subject to CGT.