A developer firm has been left with a €755,445 corporation tax bill arising from a land site "fiasco" where a company site bought for €8.6m collapsed in value to €170,000.
This follows the Tax Appeals Commission (TAC) ruling that the un-named company is liable for the €755,445 corporation tax bill arising from a bank forgiving a €6m part of a loan provided to the company used to purchase the €8.6m site for housing in 2006.
Ten years later in 2016, after the economic crash, the €8.6m site was valued at between €180,000 and €198,000 and failed to sell at auction with the highest bid recorded at €170,000.
The site included 19 acres zoned as "residential".
The Finance Director with the firm and chartered accountant told the TAC that the firm paid the bank €250,000 as part of the €6m loan forgiveness settlement in 2016 in order to bring the whole "fiasco" to a close.
The Revenue Commissioners issued the corporation tax assessment of €755,445 in 2021 after concluding that the forgiveness of the €6.04m loan facility should be treated as taxable income.
The firm appealed the assessment and now after a hearing into the case, Appeals Commissioner Clare O'Driscoll has upheld the Revenue assessment after finding that the €6m loan forgiven must be treated as a receipt in the firm's trade.
The 39 page TAC report discloses that the forgiveness of the €6m loan resulted in the firm's accumulated losses in 2016 reducing by €6.04m from €7.18m to €1.14m.
The €6m loan forgiveness was part of an €9.5m loan provided to the firm by the bank in 2006 to purchase the €8.6m site.
The firm stated that it did not seek planning permission for houses on the site due to the economic crash.
The site was put up for auction in 2016 with an advised minimum value of €180,000 but did not sell having received one bid of €170,000.
The firm had repaid €3.5m in capital and €2.1m in interest on the loan leaving the €6.04m to be repaid.
The company argued that the forgiveness of the loan should not be treated as income and was instead a transaction on a capital account.
The firm included the €6m sum as a credit sum below the gross profit line in its 2016 accounts on the basis that the amount of the debt write off did not represent a trading profit.
The TAC decision stated that it has been requested to state and sign a case for the opinion of the High Court in respect of its determination.
Reporting by Gordon Deegan
