Thomas McNamara v The Revenue Commissioners
Jurisdiction | Ireland |
Judge | Mr. Justice Barr |
Judgment Date | 19 January 2023 |
Neutral Citation | [2023] IEHC 15 |
Court | High Court |
Docket Number | [Record No. 2020 / 968 SS] |
IN THE MATTER OF A CASE STATED PURSUANT TO SECTION 949AQ OF THE TAXES CONSOLIDATION ACT, 1997 (AS AMENDED)
[2023] IEHC 15
[Record No. 2020 / 968 SS]
THE HIGH COURT
Case stated – Point of law – Jurisdiction – Appellant seeking a case stated on a point of law – Whether the sale of property constituted a sale of development land
Facts: The appellant, Mr McNamara, in his income tax return dated 14th November, 2008, in report of the year 2007, disclosed the sale of a site in Tullamore town. Following an audit, an amended assessment to capital gains tax for the year 2007 was made on 7th August, 2014. The appellant appealed that amended assessment to the Taxation Appeals Commission. The Appeal Commissioner, Ms Gallagher (the Commissioner), issued her determination on 16th January, 2020, in which she determined that the appellant had not succeeded in proving that the current use value of the property sold, equalled the sales proceeds received, namely €42m, and had not discharged the onus of proof. She therefore determined that the property sold constituted development land in accordance with s. 648 of the Taxes Consolidation Act 1997 (as amended). The appellant submitted a notice seeking a case stated on a point of law on 5th February, 2020. On 23rd September, 2021, the Commissioner issued a case stated, in which she raised three questions for the determination of the High Court: (a) whether having regard to the evidence given, and the issues raised thereupon as addressed in the notice seeking the case stated, she was correct in law in her determination that the sale of the property on 4th July, 2007 constituted a sale of development land in accordance with s. 648 of the 1997 Act; (b) whether she was correct in determining that the statutory requirements of s. 949I(6) of the 1997 Act were not met and that the appellant was thereby not entitled to rely on the additional ground of appeal and whether she sufficiently addressed the legal issues raised and provided adequate reasons in determining the legal arguments made thereto (the issues thereupon as addressed in the notice seeking the case stated); (c)(i) whether she was correct in holding that the appellant did not make a true and full disclosure in his tax return; (c)(ii) whether she was correct in dismissing the appellant’s submission that where a taxpayer has brought all relevant matters to the attention of his professional tax advisor, he should be considered to have taken due care in the preparation of their return; (c)(iii) whether she was correct to dismiss the appellant’s submission that although an error may have been made in the return, professional advice had been relied upon in filing the return and the error could not amount to a failure of the appellant to make a full and true disclosure of all material facts; (c)(iv) whether she was correct in finding that the amended assessment was not statute barred; (c)(v) whether she was correct in the sufficiency and adequacy of the reasons given in dismissing the appellant’s arguments on the applicability of the time bar and provided adequate reasons for the dismissal of those points.
Held by Barr J that one could not say that the finding made by the Commissioner that the site was sold as development land was not open to her on the totality of the evidence that was before her. The court answered the first question raised in the case stated “yes”. Barr J held that the Commissioner was correct to hold that the time limitation ground of appeal, which concerned the time within which an amendment could be made to an assessment, was not at issue in Revenue Commissioners v Droog [2016] IESC 55. He held that she was correct to hold that that ground of appeal could have been raised in the appellant’s notice of appeal; therefore she was entitled to find that the appellant was out of time to raise that as a ground of appeal at the hearing before her in 2017. Barr J held that the reasons given by the Commissioner were more than adequate. The court answered the second question “yes”.
Barr J held that the Commissioner set out adequately the reasons why she had made the finding that she did. The court was satisfied that the Commissioner was entitled to make the finding that the appellant had not made full and true disclosure in his return. The court answered all of the constituent parts of the third question “yes”.
Case stated.
JUDGMENT of Mr. Justice Barr delivered on the 19th day of January, 2023.
This is an appeal by way of case stated under s. 949AQ of the Taxes Consolidation Act, 1997 (as amended) (hereinafter “ TCA”) from the determination of an Appeal Commissioner, Ms. Lorna Gallagher (hereinafter “the Commissioner”) dated 16th January, 2020.
In his income tax return dated 14th November, 2008, in report of the year 2007, the appellant disclosed the sale of a site in Tullamore town. Following an audit, an amended assessment to capital gains tax (hereafter, “CGT”) for the year 2007 was made on 7th August, 2014. The appellant appealed that amended assessment to the Taxation Appeals Commission.
The essential question that was before the Commissioner for her determination was whether the sale price of €42m, which had been obtained by the appellant in 2007 in respect of a 3.6 acre site in the centre of Tullamore town, was the current use value (hereinafter “CUV”) of the site, as maintained by the appellant; or was the price obtained for development land, as maintained by the respondent.
Section 648 TCA defines “current use value” as follows:
“ Current use value – (a) in relation to the land at any particular time, means the amount which would be the market value of the land at that time if the market value were calculated on the assumption that it was at that time and would remain unlawful to carry out any development (within the meaning of s. 3 of the Act of 1963, or, on or after 21st January, 2002, within the meaning of s. 5 of the Act of 2000) in relation to the land other than development of a minor nature…”. What is meant by “development of a minor nature” is set out later in the judgment.
The section also defines “development land” as follows:
“ ‘development land’ means land in the State the consideration for the disposal of which, or the market value of which at the time at which the disposal is made, exceeds the current use value of that land at the time at which the disposal is made, and includes shares deriving their value or the greater part of their value directly or indirectly from such land, other than shares quoted on a Stock Exchange.”
In essence, to determine whether or not land is “ development land” for CGT purposes, one compares two figures: the sale proceeds and the current use value. If the first figure exceeds the second, the land is development land.
The Commissioner heard evidence from the appellant; his expert valuer, Mr. Kelly; his accountant, Mr. Casey; and she heard evidence from Mr. Quinn, from Savills, who had been retained by the respondent to prepare a report on the CUV of the lands at the time of disposal in 2007. Having heard evidence over a period of four days in June/July 2017, the Commissioner issued her determination on 16th January, 2020, in which she determined that the appellant had not succeeded in proving that the CUV of the property sold, equalled the sales proceeds received, namely €42m, and had not discharged the onus of proof. She therefore determined that the property sold constituted development land in accordance with s. 648 TCA.
The appellant submitted a notice seeking a case stated on a point of law on 5th February, 2020. The Commissioner issued a case stated. The appellant was not satisfied that the questions raised by the Commissioner therein, adequately reflected the points that had been raised by him in respect of the determination. That issue was tried before the High Court. In a judgment delivered on 12th July, 2021, Barrett J. held with the appellant. He directed that an amended case stated be prepared by the Commissioner. On 23rd September, 2021, the Commissioner issued an amended case stated, in which she raised three questions for the determination of this court. These questions are set out below.
The questions of law on which the opinion of the High Court is sought, are as follows:
a) Whether having regard to the evidence given, and the issues raised thereupon as addressed in the Notice seeking the Case Stated, I was correct in law in my determination that the sale of the property on 4th July, 2007 constituted a sale of development land in accordance with s. 648 TCA 1997.
b) Whether I was correct in determining that the statutory requirements of s. 949I(6) of the Taxes Consolidation Act 1997, were not met and that the appellant was thereby not entitled to rely on the additional ground of appeal and whether I sufficiently addressed the legal issues raised and provided adequate reasons in determining the legal arguments made thereto (the issues thereupon as addressed in the Notice seeking the Case Stated).
c) (i) Whether I was correct in holding that the appellant did not make a true and full disclosure in his tax return.
(ii) Whether I was correct in dismissing the appellant's submission that where a taxpayer has brought all relevant matters to the attention of his professional tax advisor, he should be considered to have taken due care in the preparation of their return.
(iii) Whether I was correct to dismiss the appellant's submission that although an error may have been made in the return, professional advice had been relied upon in filing the return and the error could not amount to a failure of the appellant to make a full and true disclosure of all material facts.
(iv) Whether I was correct in finding that the amended...
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