InDisputes ' Land Development: When Is A Taxpayer Trading?

• Published date: 04 December 2025
• Subject Matter: Tax, Sales Taxes: VAT, GST, Tax Authorities
• Law Firm: Matheson
• Author: Mr Philip Tully and David Rodgers

In the recent case 196TACD2025, the Irish Tax Appeals Commission ("TAC") considered two interesting points; (i) whether a taxpayer was carrying on a trade of land development and entitled to claim loss relief and (ii) whether the taxpayer could object to Revenue issuing its notice of assessment outside the statutory time limit when that objection had not been included in the taxpayer's Notice of Appeal.

The determination provides a useful insight into the factors that TAC will consider in determining whether a trade of land development is being carried out, including:

1. the impact of any funding arrangements put in place by a taxpayer in connection with their land development activities;
2. the efforts of the taxpayer to obtain planning permission in respect of any development; and
3. the taxpayer's treatment of their tax affairs, including whether any VAT registrations are made and the timing of any loss relief claims in relation to the purported trade.

Background

The taxpayer purchased an agricultural site with the intent of developing houses on the land for resale. The purchase of the site was funded by way of a loan. The taxpayer had no prior experience in the trade of land development.

While some works were carried out by the taxpayer on the site, these were remedial in nature and ultimately no houses were built. The taxpayer engaged two separate parties to submit a planning application in respect of the site but this process was never completed and the land remained zoned for agricultural use.

No trading losses were claimed by the taxpayer at the time and the taxpayer never registered for VAT as a trader. Subsequently, the taxpayer engaged a new accountant and sought to retroactively claim trading losses under section 381 of the Taxes Consolidation Act, 1997 ("TCA") in respect of the interest paid on the loan for the site.

Revenue disallowed the losses claimed by the taxpayer and issued amended assessments on the basis that the taxpayer was not carrying on the trade of land development. The taxpayer appealed these assessments.

Relevant Factors for a Trade of Land Development

In considering whether the taxpayer was carrying on a trade of land development, the TAC had regard to (i) the intention of the taxpayer at the time of purchase, (ii) the level of "operational activities" undertaken by the taxpayer with respect to the land, (iii) the taxpayer's initial treatment of the arrangements for tax purposes and (iv) the badges of trade.

Intention of the...