High Court Rules NPPR IS Tax-Deductible

T

T McGibney

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The High Court has ruled that the NPPR charge, imposed between 2009 and 2013, is tax-deductible against rental income.

Revenue (and iirc some politicians) had claimed it wasn't.

Shamefully, if you followed their negligent guidance, it's too late to recoup the tax deductions for 2009 to 2012.

The relief for 2013 can still be claimed up to the end of this year.

https://mcgibney.ie/2017/01/16/finally-high-court-rules-nppr-is-tax-deductible/
 
HA HA HA.

I was right. I can't wait to email my accountant. .

And for the record I claimed it. I discussed it with a different accountant in Dublin via my landlord association Irish Property Owners association and he told me everybody was claiming it.

In addition I claim my LPT too and I'm preparted to go all the way, court too with that.

I knew revenue were wrong.

Thanks Tommy for the heads up - you and I had many the battle on this.
 
I read your excellent blog post on your website Tommy.

So much for revenue 'guidance'.

And I think it's disgusting the carry on of revenue in relation to this. They promised they would do a briefing and they never did.

And there was some accountants 'body' that wrote to revenue and got a mealy mouth reply (I have a copy of that somewhere) and they should have taken a test case back then.

I'm surprised revenue went all the way to the HC though. I thought they would have capitulated before that. As in settled with that one objecter.

It was a lot of money because it was per unit and not per property.
 
It is indeed disgusting. And the same craic is going on now with the Local Property Tax, which both Revenue and Michael Noonan have explicitly claimed is not tax-deductible in respect of rental properties. This judgment is very embarrassing for both but our news media are so poor and in awe of Revenue that there will barely be a word about it.
 
Tommy, I haven't read the judgement yet as I was so excited about it that I'm not able to concentrate. I've told my accountant and sent him the link and your website etc. I hired him from AAM so he's aware of you.

When I read it I'll come back but I would argue that this means the LPT should also be deductable.

You should contact Joe Duffy who had weeks of debate about NPPR a few years ago. This is just the kind of juicy story he loves.

What was the name of the poster on here Montegrat or something, who was well up on tax?
 
Bronte said:
I would argue that this means the LPT should also be deductable.
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+1. Beyond question.

He was a Revenue official who went under the username Mandelbrot. He's no longer active. I presume Revenue officials are discouraged from involving themselves in online discussions about tax.
 
That was him. Thanks. (yes I knew he was revenue, and I'm aware that he and people from other state organisations post on here) He was pretty good. I must dig out our old 'discussions' on this topic.
 
This seems to clearly suggest that the LPT is also tax deductible as the very same argument can be made for it.
 
T McGibney said:
+1. Beyond question.
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I don't agree that it's "beyond question". At best it's arguable.

Here's the key conclusion from the judgment:-

"It is clear from the legislation underpinning the NPPR that the charge is constructed in a way expressly designed to ensure that the revenue achieved is attributable entirely to the local authority. It mandates that the collected funds are steered in one direction only – locally and away from central government. To conclude in these circumstances that the charge is in reality a national one, as contended by the appellants, would be contrived and artificial and contrary to the intent of the statute (namely the Local Government (Charges) Act, 2009). The legislature is the architect of a framework specifically engineered to ensure the resulting revenue stream flows directly into the coffers of the local authority. If anything, central government is deliberately bypassed to allow local authorities to be the collectors of the generated proceeds and are indeed empowered to prosecute defaulters. The government’s involvement is effectively to design and sign off on a system which takes it out of the loop and distances itself from what to all intents and purposes is a tax or charge levied by the local authority."

1. Is LPT "constructed in a way expressly designed to ensure that the revenue achieved is attributable entirely to the local authority"? No.
2. Is LPT "steered in one direction only – locally and away from central government". No.
3. Is LPT "specifically engineered to ensure the resulting revenue stream flows directly into the coffers of the local authority". No.
4. Are local authorities "the collectors of the generated proceeds". No.
5. Are local authorities "empowered to prosecute defaulters". No.
6. Is LPT "to all intents and purposes is a tax or charge levied by the local authority". No.

I certainly agree that LPT should be deductible but it's a bit of stretch, in my opinion, to suggest that this judgment puts the issue "beyond question".
 
T McGibney said:
Shamefully, if you followed their negligent guidance, it's too late to recoup the tax deductions for 2009 to 2012.
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I wonder whether it is too late for people to apply.

The four-year rule depends on the date on which a “valid claim” was submitted.

According to TCA 1997 s 865:

"For the purposes of subsection (3), a claim to repayment will be regarded as a valid claim where:

(1)(b) (i) a statement or return which the taxpayer is required to furnish under the Acts, contains all the information which Revenue would reasonably require to determine the amount, if any, of the repayment and the repayment arises out of an assessment made, or that would have been made, at the time the statement or return is delivered, on foot of the statement or return.

(ii) such a statement or return is either not required or it does not contain all the necessary information, when all that information is furnished, and

(iii) a correlative adjustment is concerned, when the amount of the adjustment is agreed by the two States."


Could it be argued that where Revenue had proof that NPPR was paid then that should be regarded as the date of a valid claim?
 
Sophrosyne said:
Could it be argued that where Revenue had proof that NPPR was paid then that should be regarded as the date of a valid claim?
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No. The deduction has be claimed on a tax return or supplementary communication within the 4 year period.
 
Excellent news. Hats off to Bronte for having the courage of her own convictions and deducting LPT in the first place.

As regards it being too late now to claim the deduction. Well if it was deducted as an expense in the 2016 computation on the basis that the high court clarified the law in Jan 2017, what would Revenue realistically do but accept it.
 

Just to be clear, the judgment confirmed that NPPR was deductible - it didn't say anything about LPT.
 
The NPPR and LPT are not the same. Isn't the crux of the matter that the NPPR charge is covered by Section 97 whereas LPT isn't?
 
Gordon Gekko said:
The NPPR and LPT are not the same. Isn't the crux of the matter that the NPPR charge is covered by Section 97 whereas LPT isn't?
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I'd argue that S97 covers LPT too, if not as "a rate levied by a local authority", as " an expense of management" of the property.
 
T McGibney said:
I'd argue that S97 covers LPT too, if not as "a rate levied by a local authority", as " an expense of management" of the property.
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"The cost of maintenance, repairs, insurance and management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature."

Revenue considers the cost of "management" to refer to the actual cost of collection of rents and advertising for tenants, legal fees to cover the drawing up of leases or the issue of solicitors letters to tenants who default on payment of rent.

I struggle to see how paying LPT has anything to do with the "management" of a premises.
 
[broken link removed], page 18 deals with repayments arising from mistaken view taken by Revenue.

“Where the repayment arises as a result of a mistaken view taken by Revenue of the tax treatment of some item, and that item had either been correctly dealt with in the return or statement or correctly excluded from the return or statement, the return or statement should be regarded as a valid claim for the purposes of the time limit for claims.”

Revenue will, therefore, accept that a mistaken assumption is established where, for instance, repayments arise because –
  • The High Court or the Supreme Court or the European Court of Justice has found against Revenue’s interpretation of the law
  • Revenue accepted a ruling of the Circuit Court or of the Appeal Commissioners that they had incorrectly interpreted a particular provision
  • Revenue accepted a recommendation of the Ombudsman that they had applied the law incorrectly in a particular case
  • Revenue otherwise revised its published interpretation of a particular provision or a position adopted, or ruling made, in a particular case. Mistaken assumption would not, however, apply where, in a particular case, Revenue, for whatever reason, settled that case and agreed to repay tax without prejudice to its view of the meaning of a particular legal provision underlying the case.
Apart from the situations indicated above, it is difficult to be more specific. Essentially, repayments will have to be looked at on a case by case basis to determine whether they arise because of a mistaken assumption in the application of the law by Revenue or whether they arise for some other reason.”

I might be clutching at straws here but this would clearly be regarded as a mistaken assumption by Revenue and people would have claimed a deduction for NPPR on their rental returns but for that mistaken view, which was published.
 
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Sarenco said:
Revenue considers the cost of "management" to refer to the actual cost of collection of rents and advertising for tenants, legal fees to cover the drawing up of leases or the issue of solicitors letters to tenants who default on payment of rent.
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Especially after today, I wouldn't necessarily be taking Revenue's word here as gospel. What does management mean if not attending to the responsibilities and liabilities that attach to ownership of a premises?
 
Even on revenue's own website they have accepted that LPT should be a deductible expense (source), the Government just haven't got around to bring it into effect yet. Given this ruling it certainly suggests you're better off including LPT as an expense now and let it be challenged by revenue. The worst that can happen is that it isn't allowed. If you don't include it you could well find it's too late to claim it back later.
 
T McGibney said:
What does management mean if not attending to the responsibilities and liabilities that attach to ownership of a premises?
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Well, the cost has to relate to the "...management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received".

LPT is not an expense that relates to or constitutes an expense of "the transaction or transactions under which the rents or receipts were received". LPT arises even if no rent is ever sought or received in respect of the particular premises.
 
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