Revenue Precedents

A balancing charge made in charging a person's income under Case V of Schedule D is a Case V surplus for the purpose of section 97(1). IT913011

Interest on borrowed money employed in the purchase, repair or improvement of a rented premises is allowable. In certain situations, Revenue allows interest where the original loan is replaced by another loan. In determining whether such interest is to be allowed, the inspector will take into account all the circumstances of the case, including whether the transaction was a genuine commercial transaction. IT962509

Whether interest paid on a loan used to repay a loan for which relief allowable under section 97 would be allowed under section 97? Yes; provided the redemption of the earlier loan was for bona fide commercial reasons and not for the avoidance of tax, the interest could be allowed in computing profit rent. IT932019

Is pre-letting expenditure allowable under section 97(3) TCA 1997 given that pre-trading expenditure is allowable under section 82 TCA 1997? Pre-letting expenditure is not allowable under section 97(3). The only Case V deductions allowable are those set out in section 97(2). Under Section 97(3), the amount of the deductions authorised under section 97(2) is the amount which would be deducted under Case 1 if the receipt of rent were deemed to be a trade carried on during the currency of the lease or the period during which the recipient of the rent was entitled to that rent. In a pre-letting situation there is no receipt of rent. Accordingly, section 97(3) does not invoke section 82 for the purposes of authorising a deduction for pre-letting expenditure. IT972519

A deduction is allowable under section 97 sub-section (2) (e) where a loan which falls into the subsection is replaced by other borrowings for genuine commercial reasons only. CTF90/302A