The Tax Appeals Commission (TAC) has quashed a capital gains tax (CGT) bill of €692,010 served by the Revenue Commissioners on the shareholder of a property company.
In a rare victory for an appellant over Revenue at the TAC, the commission has directed that the Revenue assessment on the man be reduced to zero.
In her ruling, commissioner Claire Millrine stated that Revenue erred in raising the assessment.
Revenue served the €692,010 CGT bill on the man in 2018, arising from him receiving a house as a gift from his mother in 2015. The man had been living in the home since 2012.
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Revenue served the bill after concluding that the man did not qualify for a CGT dwelling house exemption after finding that he had a beneficial interest in several houses at the time of his mother’s gift.
The man owns a third of a property company with his two brothers, and the firm “holds a large portfolio of properties”.
The matter at issue in the appeal related to whether the man was, at the date of the gift of the property, beneficially entitled to any other house or to any interest in any other house.
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In her ruling, Ms Millrine found that if the commission was to accept the argument of Revenue, this would result in a situation where any taxpayer who is a shareholder in a company that has acquired property or has a portfolio of properties, would be automatically disentitled to dwelling house relief on an entirely separate transaction, unconnected with the company, despite occupational requirements being satisfied.
Ms Millrine stated that she doesn’t believe that this was the intention of the legislature.
She determined that the appellant does not and could not have a beneficial interest in the properties, as they are held by the company.
She said: “What he has is a beneficial interest in the shares of the company.”
In the case, the man had purchased a separate dwelling in July 2004 and in March 2013, he sold the property for €165,000 to the company he part-owns with his brothers.
The man argued to Revenue that any beneficial interest he had in the property had ceased on the sale of the property to the company.
In response, Revenue stated that he had an interest in the property, then transferred that to the company owned by himself and his family, “essentially retaining it on a leash, but presenting to the respondent (Revenue) that he has no interest in the property”.
