A forestry owner has won a €1.43 million Capital Gains Tax (CGT) dispute with Revenue relating to €10 million sales of mainly woodland.
This follows Tax Appeals Commissioner, Claire Millrine reducing Revenue’s CGT demand of €1.429 million served on the businessman to zero.
The disposal of woodland is exempt from CGT and Millrine rejected Revenue’s case that the value the businessman put on the woodland part of the sold assets was overstated.
She stated that she was satisfied that the woodland values obtained by the forestry owner were based on contemporaneous valuation reports prepared by independent expert valuers, all of which are consistent in terms of the valuations ascribed to the woodland and/or trees.
She stated that accordingly, Revenue was incorrect to raise the assessments and found that Revenue’s “valuations carry little persuasive value”.
Tax dispute
The forestry owner and his wife disposed of around 385ac of mainly forestry lands for €6 million in 2012 and the lands had planning permission for the construction of a wind farm.
In 2016, the couple sold a further 323ac of woodland for €4 million.
The couple put a value of €4.38 million – or €11,900/ac – on the woodland in the 2012 sale leaving €1.62 million liable for CGT.
The appellant paid €141,031 CGT on the sale; Revenue however, determined the correct bill should have been €941,431 – a difference of €800,400.
In relation to the 2016 €4 million sale, the couple put a value of €3.3 million on the woodland – or €10,223/ac leaving €700,000 liable for a CGT charge.
However, Revenue determined an additional €629,158 CGT liability on the 2016 sale.
Revenue issued the combined €1.429 million CGT demand and after contending that the value of woodland from the 2012 should have been €4,000/ac and €4,438/ac from the 2016 sale.
The woodland owner appealed the €1.43 million CGT demand to the Tax Appeals Commission (TAC).
Appeal by forestry owner
In her determination at the end of a 40-page report, commissioner, Claire Millrine stated she was satisfied that an approved, measurable and scientific approach was taken to the valuation of the trees growing on the land, by two of the forestry owner’s witnesses.
In contrast, Millrine found the evidence of Revenue’s expert witness “to have little persuasive value” and the witness was not particularly objective or impartial in his approach where he was unwilling to consider his opinion in light of new facts arising.
The forestry owner told the TAC hearing that he engaged four experts to ascertain the value of the woodland in relation to the disposals and the apportionment to be applied to his tax returns.
A forestry consultant on behalf of the woodland owner told the TAC that the underlying value of the land is negligible and that the value is the trees.