The man failed in his appeal at the Tax Appeals Commission (TAC) against a Revenue Commissioners assessment of his tax liability.
He had purchased the 4.5-acre site for €330,000, and funded it by way of a loan in 2005. He then claimed trading losses of €168,120 from 2008 to 2015.
However, Revenue disallowed these, after concluding the man was not carrying on any trade to qualify for trading losses.
Simon Noone, an appeal commissioner, has now upheld that Revenue assessment.
In his findings, Mr Noone concluded that “the appellant’s claim for trading losses on his income-tax returns was based on the incorrect and inaccurate basis that he had been engaged in trade”.
In evidence at the TAC, the unnamed man said he purchased the site with a view to building and “flipping” a few houses.
He believed it would be attractive to “big spenders” and anticipated achieving a €500,000 profit on the first house, which would enable him to build the second, and so on, until finally he expected a total profit of about €2m.
He said there was a good chance of building three to five houses, with a possibility of even more.
The plans abandoned me… the environment changed
The appellant said he did not buy the land to build a house for himself, and the current status of the site was that “it’s still there”. He explained he did not register for Vat because, “I figured nothing had happened yet”.
When it was put to the appellant in cross-examination that he simply abandoned his plans in 2007 to develop the land, he said, “the plans abandoned me… the environment changed”, a reference to the financial crash that led to a slump in property prices.
However, Mr Noone found that the evidence suggested a distinct lack of urgency on the part of the appellant to progress the development of the site. The commissioner was satisfied the man never intended to engage in the trade of land development.
Mr Noone noted that before 2005, the appellant had no experience in the business of land development; that he never obtained funding to build the homes; that he never applied for planning permission; and that the land remains zoned as agricultural.
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