Business

Man not entitled to tax relief for renting out home he left due to racial harassment

Adnan Ahmad Siddiqi argued rent on new home should be deducted from rental income he received from tenants

While it was “very unsatisfactory” for Mr Siddiqi and his family to be forced out due to racial harassment, this fact does not alter the legal question, the judge said. Photograph: iStock

Ellen O'Riordan
Fri Apr 19 2024 - 12:21

The High Court has found against a Pakistani man in his bid to assert an entitlement to tax relief for renting out the home he and his family left due to alleged racial harassment from some locals.

However, Adnan Ahmad Siddiqi partially succeeded in his court claim, as Mr Justice Oisín Quinn agreed with him that the Tax Appeals Commissioner (TAC) erred in how he considered an €85,000 payment from his former employer.

The sum came while Mr Siddiqi was on stress leave and was part of a compromise agreement in March 2014 that required his Equality Tribunal claim for alleged racial discrimination be withdrawn, said the judge.

The court was asked by the Tax Appeals Commissioner (TAC) to determine if he was correct to uphold the Revenue Commissioner’s decision on three legal issues under the Taxes Consolidation Act of 1997.

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In a ruling, the judge said Mr Siddiqi, who has been living and working in Ireland since 2000, claimed he should be allowed to deduct rent he paid for his new residence from the rental income he received from tenants who moved into his former home. His claim about “serious incidents of harassment” was supported by documentation supplied to gardaí, said the judge.

Mr Siddiqi, with an address in Dublin 14, argued his move in 2014 was necessary due to the alleged failure of gardaí to address the harassment. His rent on his new home was higher than the rental income being received from his former home and, as he had not wanted to move, he submitted there was a connection between the two payments such that his tax liability should be reduced to nil between 2014 and 2017, said the judge.

Mr Justice Quinn was satisfied the TAC was correct in his conclusions on the rental income taxes.

While it was “very unsatisfactory” for Mr Siddiqi and his family to be forced out due to racial harassment, this fact does not alter the legal question. The judge said “revenue law has no equity”, and the “cost of putting a roof over your head is not a deductible expense”.

Separately, the Revenue deducted €21,872 in taxes on the €84,903 ex gratia payment, which Mr Siddiqi received on top of his statutory redundancy. It treated it as connected with the termination of his employment as a financial accountant with a car rental firm because a related compromise agreement expressly described it as a termination payment, said the judge.

Mr Siddiqi, representing himself, argued this was essentially a settlement of his pending claim before the Equality Tribunal and a potential claim for injury to his mental health as a result of alleged discrimination. Amounts paid to settle such claims would not be taxed, said the judge.

The Revenue submitted that the TAC was correct in finding the payment was taxable and noted the compromise agreement provided that Mr Siddiqi should receive a net sum of €65,000, which is what he got. It said the agreement itself proposed this type of tax treatment and Mr Siddiqi had entered into that deal with the benefit of legal advice from expert employment law solicitors.

Mr Justice Quinn disagreed, finding Revenue was required to objectively analyse the “matrix of fact” surrounding the payment. Correspondence from 2018 and 2019 should have been seen as relevant, as these referred back to the context of the settlement, he said.

He noted the settlement led to the equality claim being withdrawn and provided for a €10,000 payment plus VAT for Mr Siddiqi’s legal fees. Once statutory redundancy was paid, there should have been a “real question” as to why a further €85,000 sum was given to an employee on an annual salary of €57,000 who had worked with the company for only about three years, the judge said.

The “overarching factual context” combined with the legal provisions of section 192A of the 1997 Act required Mr Siddiqi’s assertion that the sum was paid in compromise of a claim to be examined more comprehensively, the judge said.

He held that the TAC was incorrect in his interpretation of the compromise agreement and in finding that the sum was not one made in settlement of a claim.

Ellen O'Riordan

Ellen O'Riordan

Ellen O'Riordan is an Irish Times reporter

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