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In addition to its efforts to recoup additional CGT/CAT and income tax from Kerry suppliers over their co-op shares, the Revenue may open a third front this year – this time in relation to the spin-out decided in May 2013.
At the time, Kerry Co-op shareholders each swapped one-fifth of their co-op shares for a holding in Kerry Group plc. The six million plc shares transferred to co-op members in the deal were worth €275m at the time.
Internal documents show that the Revenue’s large cases division (LCS) and legislation service (RLS), which is in charge of interpreting tax laws, have been reviewing the tax applicable to the spin-out since at least the first half of 2016.
The minutes of the Revenue’s business management executive on 27 October state: “We are also interacting with LCD/RLS who are determining whether the 2013 redemption of co-op shares for plc shares qualified for relief, which could require intervention in over 13,000 taxpayers.”
While the documents released under the Freedom of Information Act do not provide details on the nature of the current review, the Revenue may be looking for a way to apply to the spin-out its new interpretation of co-op share values based on their price on the grey market. Each co-op share was exchanged for around six plc shares at the time. With co-op shares sold in early 2013 for around €100, and plc shares trading at €46 at the time of the spin-out, Revenue officials may be looking to tax the €175 apparent windfall generated by each co-op share swapped in the transaction.
The 2013 spin-out was the most recent occasion when Kerry Co-op has reduced its shareholding in Kerry Group plc to 13%. In 2011, 10.1m plc shares were transferred to co-op shareholders, worth an estimated €290m.
Listen to a discussion of the Revenue's Kerry co-op project in our podcast below:
Listen to "Inside the Revenue's Kerry co-op project" on Spreaker.
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