The High Court ruled that the Non-Principal Private Residence (NPPR) charge could be deducted from rental profits as “any rate levied by a local authority” under section 97(2) of the Taxes Consolidation Act 1997.
The judgment, delivered by Ms Justice Reynolds on 28 November 2016, answered in the affirmative a question referred to the court by the Appeal Commissioner. It concerned the interpretation of the tax deduction provision, not a new assessment of the underlying facts.
The taxpayer owned six rental properties subject to the NPPR charge. He paid €200 for each property in 2009 and claimed a total deduction of €1,200 against rental income. In a written determination issued on 21 October 2013, the Appeal Commissioner had allowed the deduction, finding the charge was a rate levied by a local authority. The Revenue Commissioners appealed by way of case stated.
Revenue argued that the charge was fixed by national legislation and was distinct from a local authority rate, whose amount was determined by the local authority. The taxpayer argued that “any rate” could encompass local authority charges, and submitted that denying the deduction would subject the same income to two forms of tax.
The court said the NPPR legislation directed the collected revenue to local authorities and empowered them to prosecute defaulters. It considered that treating the charge as national would be contrary to the statute’s intent. As the Taxes Consolidation Act did not define “rate”, the court applied its ordinary or colloquial meaning. It concluded that the phrase “any rate levied by a local authority” included the NPPR charge.
The court’s answer resolved the legal interpretation referred by the Appeal Commissioner. The judgment did not set out a separate order on costs or address deductions for other years or other charges.