Revenue Commissioners v Collins

• Jurisdiction: Ireland
• Judge: Ms. Justice Reynolds
• Judgment Date: 28 November 2016
• Neutral Citation: [2016] IEHC 748
• Docket Number: [RECORD NO. 2015/259 R]
• Court: High Court
• Date: 28 November 2016

[2016] IEHC 748

THE HIGH COURT

Reynolds J.

[RECORD NO. 2015/259 R]

BETWEEN

THE REVENUE COMMISSIONERS

APPELLANT

AND

THOMAS COLLINS

RESPONDENT

Revenue – S. 97(2) of the Taxes Consolidation Act, 1997 – Local Government (Charges) Act, 2009 – Whether Non-Principal Private Residents charge was deductible under rental profits – Case stated

Facts: The present case came by way of a case stated by the Appeal Commissioner for the opinion of the High Court on the question as to whether the Non-Principal Private Residents charge (‘NPPR charge’) chargeable pursuant to the Local Government (Charges) Act, 2009, was deductible against rental profits under s. 97(2) of the Taxes Consolidation Act, 1997, as being ‘any rate levied by a local authority’. The appellant contended that the NPPR charge was not a rate levied by a local authority, but a charge pursuant to the Act of 2009 and thus it was not deductible. The respondent contended that the word ‘charge’ being a generic term must be given wide interpretation.

Ms. Justice Reynolds answered the question posed by the Appeal Commissioner in the affirmative. The Court held that the NPPR charge was levied to ensure that the revenue generated would go to the local authority. The Court held that the phrase ‘any rate levied by the local authority’ must be given ordinary and natural meaning, which would not limit the rate to any particular category but also included any rate that might be imposed by the legislature in future.

JUDGMENT of Ms. Justice Reynolds delivered the 28th day of November, 2016

1 This matter comes before the Court by way of case stated, the matter having been referred by the Appeal Commissioner. The question for the Court to determine is as follows:

‘Whether the Non-Principal Private Residents charge (hereinafter referred to as the ‘NPPR charge’) chargeable pursuant to the Local Government (Charges) Act 2009 is deductible against rental profits under s. 97(2) of the Taxes Consolidation Act 1997 (hereinafter referred to as ‘the TCA 1997’) as being ‘any rate levied by a local authority’.

2 The NPPR charge was introduced by the Local Government (Charges) Act, 2009 and was commenced by statutory instrument on the 24th July, 2009. It was introduced as an imposition on owners of more than one residential property, on all properties other than the taxpayer's principal private residence, and applies to holiday homes and rental properties. For the purposes of this application, the only issue for the Court to determine is how the charge is to be applied in respect of rental properties and whether or not it should be allowed as a deductable expense from rental profits.

3 By way of background, the NPPR was introduced to go towards funding local authority services. An annual charge of €200 per property applied from 2009 to 2013 in respect of residential property that was not the taxpayer's only or main residence in those years. The charge was collected by the local authority and retained by the local authority for its use.

4 The Local Government (Charges) Act, 2009 provides that ‘charge’ has the meaning assigned to it by s. 3(1) and (2). The section provides as follows:

‘3.— (1) A person who, on such date (in this Act referred to as the ‘liability date’) falling in the year 2009 as is prescribed, is the owner of a residential property shall be liable to pay the sum of €200 (in this Act referred to as a ‘charge’) to the relevant local authority.

(2) A person who, on 31 March (in this section also referred to as the ‘liability date’) of each year subsequent to the year 2009, is the owner of a residential property shall be liable to pay the sum (in this Act also referred to as a ‘charge’) specified in subsection (3) to the relevant local authority.’

5 Section 97(2) of the Taxes Consolidation Act, 1997 (as amended) provides as follows:

‘97 (2) The deductions authorised by this subsection shall be deductions by reference to any or all of the following matters –

(a) the amount of any rent repayable by the person chargeable in respect of the premises or in respect of part of the premises;

(b) any sums borne by the person chargeable –

(i) in the case of a rent under a lease, in accordance with the conditions of the lease, and

(ii) in any other case, relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received,

in respect of any rate levied by a local authority, whether such sums are by law chargeable on such person or on some other person;’

Facts

6 The respondent taxpayer herein is the owner of six rental properties to which the NPPR charge was applicable. In the taxable year 2009 he had paid the said charge, being €200 per each property and then sought to...