This appeal before the Tax Appeals Commission (TAC) concerns Revenue’s refusal to grant relief in accordance with section 477C of the Taxes Consolidation Act 1997 (‘TCA 1997’) known as the help to buy (‘HTB’) scheme.

The taxpayer purchased her home for €279,000. The mortgage in respect of the property was €195,000. The loan-to value ratio was 69.89%. One of the conditions to be satisfied in order to avail of the HTB is the requirement of a loan-to-value ratio of “not … less than 70%”. The taxpayer’s application for relief was not accepted by the Revenue Online Service (ROS) as the loan-to-value ratio did not meet the required statutory minimum of 70%.

The taxpayer contacted Revenue with an offer letter from her bank stating that the loan to value ratio was 70%, the bank had rounded up. Revenue responded that ROS was built to reflect the requirements set out in the legislation and was thereby unable to accept an application for relief where the loan-to-value ratio was less than 70%.

Submissions

The taxpayer claimed that the bank had characterised the loan-to-value ratio as 70 percent on the basis of rounding up to the nearest whole percentile and stressed the relevance of the fact that all other qualifying criteria for the HTB were satisfied. The taxpayer stated that in her previous dealings with the Revenue she was requested to round up figures when completing her income tax return and it was not inconsistent of Revenue to seek to depart from the rounding up process.

Revenue’s position was that the rounding up or down of cents to whole euro was and the rounding of percentages was not the same. According to Revenue section 477C TCA 1997 required a loan-to-value ratio of “not … less than 70%” and in this appeal it was less than 70%.

Findings

The TAC agreed with Revenue’s position that the rounding of cents to whole euro is not the same as rounding percentages. The rounding to whole euro would results in a difference of a few cents but the rounding of percentages could result in a significant difference. In this case, the the taxpayer’s mortgage had been €195,300 as opposed to €195,000, she would have qualified for the HTB scheme, all things being equal.

Section 477C TCA 1997 requires a loan-to-value ratio of ‘not … less than 70%.’ In this case it was only fractionally less than 70% however, it was still less. It is well established from the long history of case law that the interpretation of taxation statutes is a literal one. The TAC determined that they did not have the authority or jurisdiction to depart from the express statutory requirement of ‘not … less than 70%.’ Accordingly the taxpayer is not entitled to the relief under the HTB scheme.

You can read the full determination on the Tax Appeals website www.taxappeals.ie