The High Court has provisionally indicated that a tax dispute over land-development losses should return to the Tax Appeals Commissioner, after finding that the Commissioner had not considered evidence of professional fees paid for design and planning work.
The case concerns a dentist who bought a 4.5-acre site near Ballymore Eustace, Co. Kildare, in 2005 for €330,000. He said he intended to build houses for resale, but the land was zoned for agricultural use, no planning application was made, and development did not proceed. He claimed borrowing costs as trading losses against other income from 2008 onwards.
Following an audit, Revenue withdrew loss relief for 2008 to 2015, disallowing €168,120. The Tax Appeals Commissioner ruled in 2021 that the taxpayer was not carrying on a land-development trade from 2005 to 2015. The Commissioner also found that his returns for 2008 to 2011 did not fully disclose material facts, so the four-year limit on raising assessments did not apply. The taxpayer appealed by way of a case stated, asking the High Court to consider whether those conclusions were correct in law.
Justice Conor Dignam said the Commissioner was entitled to assess the overall circumstances, including the site’s zoning, the absence of a planning application, and the lack of a written agreement for construction finance. The court rejected the argument that purchasing land with an intention to develop it necessarily began a trade in every case. It said the taxpayer’s asserted intention had not been rejected by the Commissioner, and the court proceeded on the basis that he intended to develop the site.
However, the judgment said the Commissioner had not weighed professional fees paid after purchase to Design Venture Limited for house design and a planning application, and to Huf Haus GmbH. There was also evidence that a local planning agent had been engaged and paid more than €3,000. The judge said these matters could bear on whether the taxpayer took steps towards development and should have been considered alongside the other evidence. Their omission meant the Commissioner had not considered all relevant matters.
The court answered “No” to the first question, which asked whether the Commissioner was correct in law to find that the taxpayer was not conducting a land-development trade. It did not decide that the taxpayer was in fact trading. Justice Dignam said remittal to the Commissioner was the appropriate course, but treated that as provisional and said he would hear the parties. He also gave a provisional view that he should not answer the second question about disclosure and the time limit if the case were remitted. The judgment records no final remittal order or final answer to that second question.