Farmer loses contested capital gains tax case with Revenue

By Gordon Degan

A private council farmer who is compulsorily buying farmland for £2.85million has lost to the tax commissioners over a disputed Capital Gains Tax (CGT) bill.

This follows the rejection by the Tax Appeals Commission (TAC) of the farmer’s appeal regarding the taxman’s CGT invoice for €44,185.

The case is now set to go to the High Court after the TAC confirmed that it had been asked to declare and sign a High Court Opinion Record of its decision which has just been published.

The bill came after the farmer received £2.85million in February 2008 from an unnamed county council for 30 acres of land subject to a Compulsory Purchase Order (CPO) to facilitate the highway construction.

The farmer challenged CGT’s proposal, arguing that he received tax relief for certain amounts collected under the CPO.

When the case was heard by TAC in June, the farmer said that when the highway was built, it ran directly through his two farms.

He said the highway had a huge effect not only on his ability to farm, but also on his ability to access land.

He maintained that the actual shape of his fields is now problematic and that he finds himself with an area of ​​land that is very difficult to cultivate, given the triangular shape of the land.

The farmer said he may have had the opportunity to start milking but that was taken away from him when the highway was built as the land was now divided and he could not bring the cows on the bridge.

He added that he found the whole CPO process extremely stressful and never wanted to hit the road.

The farmer said it was kind of a bereavement for him, having taken over the farm in 1977 and having been a farmer since he was 15 years old. He said the farmland had belonged to his family for many years.

Cross-examined by the tax lawyer on one of the elements claimed, the farmer declared that “he gave everything to his accountant since he is a farmer and not an accountant”.

In 2011, the Ministry of Revenue issued a notice of audit of the appellant’s tax affairs for the year 2008.

It was argued on behalf of the farmer that he had repaired the damage caused by the CPO, buying a neighboring farm for the sum of 1.3 million euros in mid-April 2008 and carrying out works and corresponding tax relief was offered.

The farmer’s agent told the tax authorities in 2019 that his client could benefit from tax relief for “mainly the detrimental damage to agricultural land of €282,000 and €192,000, the €156,250 reinvestment costs, €61,500 for permanent trouble; and €25,000 for temporary disruption”.

The farmer argued that the lump sum of 2.8 million euros received can be subdivided and specific sums assigned to the headings of compensation – injurious condition, disorder, indemnity and goodwill – and that different provisions s apply.

The farmer argued that they should be considered, not as a sum paid on the disposal of the asset, but as capital derived from an asset, when no asset is transferred.

In June 2018, after significant correspondence between the parties, the tax authorities issued a CGT notice of €44,185 for the year 2008.

The farmer claimed CGT tax relief in 2018 and also argued that the relief was requested on time, claiming that the four-year time limit for establishing corrective taxation did not apply in this case. .

The tax commissioners have argued that the proposed subdivision of the €2.85m lump sum is artificial and should not happen.

The tax authority also argued that the farmer’s request for CGT relief was first mentioned in correspondence in January 2018 and was outside the four-year limit.

However, dismissing the farmer’s appeal, Commissioner Claire Millrine found that the appellant failed to demonstrate that the tax is not payable and that the assessment should stand.

Sallie R. Loera