Tax Appeals Commission determination 103TACD2023 regarding Corporation Tax, 2023

Administrative Decision Number103TACD2023
Date24 May 2023
Subject MatterCorporation Tax
RespondentTHE REVENUE COMMISSIONERS
1
103TACD2023
Between:
Appellant
and
THE REVENUE COMMISSIONERS
Respondent
_________________________________________________
Determination
_________________________________________________
2
Contents
Introduction ........................................................................................................................... 3
Background ........................................................................................................................... 3
Legislation and Guidelines .................................................................................................... 4
Section 76(1) of the Taxes Consolidation Act 1997 (hereinafter the “TCA1997”) ............... 4
Section 76A(1) of the TCA1997 ......................................................................................... 5
Section 87(1) of the TCA1997 ........................................................................................... 5
Submissions and Witness Evidence ...................................................................................... 5
Witness Evidence .............................................................................................................. 5
Appellant’s Submissions .................................................................................................... 8
Respondent’s Submissions ............................................................................................. 13
Material Facts ..................................................................................................................... 20
The Loan was incurred for the purposes of trade by the Appellant: ................................. 22
The Loan was of a temporary or fluctuating nature; ......................................................... 27
A deduction was allowed for the debt. ............................................................................. 29
Findings of Material Fact ................................................................................................. 33
Analysis .............................................................................................................................. 35
Determination ..................................................................................................................... 39
3
Introduction
1. This matter comes before the Tax Appeal Commission (hereinafter the "Commission") as
an appeal against a Notice of Determination on the tax treatment of the forgiveness of a
loan facility of €6,043,555 for the accounting period ending 31 October 2016. The Notice
of Determination was issued by the Revenue Commissioners (hereinafter the
“Respondent”) on 25 May 2021 and indicated that the Respondent had determined that
the forgiveness of the €6,043,555 loan facility should be treated as taxable income.
2. The amount of tax in dispute in this appeal is €755,445.
Background
3. (hereinafter the “Appellant”) is an Irish registered private company limited
by shares which is involved in the purchase and development of lands for residential
housing.
4. On 5th December 2006 the Appellant received a loan offer for a bridging term loan of
€9,500,000 (hereinafter the “Loan”) from (hereinafter the “Bank’’) to
finance the purchase of a site of acres at
(hereinafter the “Site”). The Loan was subsequently drawn down by the Appellant on 29
January 2007.
5. The Loan was approved for a period of 15 months and was to be reduced by way of site
fines in the sum of €100,000 per site from the sale of remaining residential units in a
separate development owned by the Appellant known as the development,
also in . The security given for the Loan was as follows:
i. Legal charge/mortgage over residential units in the development;
ii. Floating debenture over the Appellant’s assets and undertakings to incorporate a fixed
charge over the Site; and
iii. Such insurance as required by the Bank.
6. The Appellant’s intention was to develop the Site with residential houses.
7. Following the purchase, the Appellant did not develop the Site and held it instead as
trading stock.
8. The Loan was serviced by the Appellant and capital repayments in the amount of in or
around €3,500,000 were made.

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