Tax Appeals Commission determination 39TACD2023 regarding Income Tax, 2023

• Administrative Decision Number: 39TACD2023
• Date: 23 December 2022
• Subject Matter: Income Tax
• Respondent: The Revenue Commissioners

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Between

Appellant

and

The Revenue Commissioners

Respondent

Determination

Introduction

1. This is an appeal to the Tax Appeals Commission (“the Commission”) pursuant to and in

accordance with the provisions of section 949I of the Taxes Consolidation Act 1997 (“the

TCA 1997”) brought on behalf of (“the Appellant”) against Notices of

Amended Assessment to Income Tax issued by the Revenue Commissioners (“the

Respondent”) for the years 2016 and 2017, in the sum of €30,101 and €30,493

respectively.

2. The liabilities arose as the Respondent assessed the Appellant as being the recipient of

Farm Payment Entitlements, namely the Basic Payment Scheme entitlements (“BPS”)

paid by the Department of Agriculture, Food and Marine (“DAFM”), and which have not

been included in the Appellant’s income tax returns for the years 2016 and 2017.

3. The core issue in this appeal is whether the BPS entitlements paid by the DFAM, during

the years under appeal, are taxable as income in the hands of the Appellant, as contended

by the Respondent, or are instead taxable as income received by a Company formed,

owned and managed by the Appellant and his brother, namely

(“the Company”), as contended by the Appellant.

39TACD2023

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4. On 16 December 2021, the Appellant duly appealed to the Commission. The appeal

proceeded by way of a hearing on 6 December 2022. The Appellant was represented by

Tax Advisor and the Respondent was represented by Junior Counsel. The

Appellant gave sworn oral evidence in respect of his appeal and the parties’

representatives made submissions.

Background

5. The Appellant owns lands at , which he previously farmed. In 2005,

the Appellant and his brother decided to carry on the trade of farming through the vehicle

of a limited liability Company and the Company was incorporated, some 17 years ago for

the purpose of farming. Both the Appellant and his brother are Directors of the Company.

The Appellant has a 50% shareholding in the Company.

6. The Appellant contends that since 2005, all farming activities are carried out through the

Company. A Licence is granted by the Appellant to the Company on an annual basis for

the purpose of grazing sheep and cattle only. A copy of said Licence Agreement dated 1

January 2016, is submitted at page 113 of the Respondent’s bundle of documents. It

provides for the number and breakdown of acres that form part of the Licence Agreement

at the cost of €25,000 per year. Further, the terms of the said Licence Agreement set out

inter alia that “the licence includes the right to utilise any basic Payment Scheme

entitlements attached to the said lands”.

7. Teagasc, the Agriculture and Food Development Authority, is the national body providing

integrated research, advisory and training services to the agriculture and food industry and

rural communities. It was established in September 1988 under the Agriculture (Research,

Training and Advice) Act, 19881.

8. Teagasc was engaged on behalf of the Appellant to process and submit the online

application for the BPS entitlements to the DFAM. The application was completed and filed

online by an employee of Teagasc. A copy of said application form for 2016 and 2017 is

submitted in the Respondent’s bundle of documents at page 91 and 98 respectively. The

documents show that the application was submitted in the name of the Appellant and his

brother, as opposed to the Company.

9. Notwithstanding the names on the application form, the DFAM made the BPS entitlement

payments to the bank account of the Company and the Appellant did not receive the BPS

entitlement payments to his bank account, for the years under appeal. A copy of the

1 https://www.teagasc.ie/about/