Retirement Relief – Business Owners

Cute Deer

We will discuss a recent case that involved Retirement Relief and farming. This case is not only relevant to farmers but to business owners too.

It came up on my news feed last night and piqued my interest. How much tax was in play? What were the circumstances and who won? I got stuck into the 20 pages and it turned out to be a very interesting case. I either love tax or need to get more friends! We will look at

  • Background
  • Taxes involved.
  • Case for the Jeffs
  • Case for Revenue
  • Outcome
  • Key Learnings


And I’d like to take a minute

Just sit right there

I’ll tell you how I became the prince of a town in West Clare

Jazzy Jeff met his consort Steph in a disco in Ennis many moons ago. Back when there were slow sets and your phone number had two digits. They fell in love and Jazzy felt like a king the day he married Steph. Steph was from a farming background, and they decided to go farming.

They farmed for many years, but Jazzy got sick. Steph took a more hands-on role to keep the farm going while he was recovering. It all became too much, and they got out of farming. But they didn’t lose their love for the land.

They purchased a house and 20 acres for IR£195000 [€247650] in 1991 in Doonbeg. Deer farming was their chosen enterprise. Along came Bambi and friends and they stocked the land with deer until 2002. While they loved farming, the business didn’t make a profit for many years. With losses mounting they made the call to get out of deer and to look after the land. In 2005 the Jeffs sold 16.5 acres for €950000. They didn’t pay tax on that nor file a tax return.

Taxes Involved

When you dispose of an asset the tax involved is Capital Gains Tax [CGT]. Other taxes can be relevant too, like Stamp Duty, Vat, and Cat, we will concern ourselves with the CGT element.

Roll forward 10 years and Jeff’s tax agent Donald sent an unprompted disclosure to Revenue. This was for Income Tax returns from 2006 to 2014. In response to the disclosure, Revenue issued a notification of Revenue Audit. The period of the audit was from 2005 to 2014 and covered Income Tax and CGT.

The audit took place on the 5th of October 2015. On that day they submitted a CGT return that looked like this

Claim to Reliefs – self
Retirement Relief [outside the family] Consideration on disposal of qualifying assets €475000
Claim to Reliefs – spouse
Retirement Relief [outside the family] Consideration on disposal of qualifying assets €475000
Chargeable Gains €357500 €357500
Personal Exemption €1270 €1270
Net Chargeable Gain €356230 €356230

Revenue wanted €138000 but the Jeffs claimed they didn’t owe anything. Their view was they qualified for Retirement Relief. This was on the basis that Jazzy and Steph owned and farmed the land for a period of 10 years before the disposal. Revenue didn’t agree.

On the 8th of October 2015, Revenue wrote to Donald. The Jeffs deregistered for Income Tax in November 1998. As a result, it was Revenue’s view that the land was no longer in use for farming. Thus, the land didn’t fall within the definition of a chargeable business asset at the time of disposal. That definition is key to claiming Retirement Relief

Case for the Jeffs

On the 14th of January 2016, Donald wrote to Revenue confirming the case for the Jeffs.

  1. Jazzy and his wife had been farming the land that they sold for 10 years ending on the disposal.
  2. The Jeffs held a joint bank account in which they both could sign cheques. And both were involved in the operation and management of the enterprise.
  3. Until 2002 they stocked deer on the farm, but the business was unsuccessful with losses arising.
  4. When they stocked the land with deer the land became very fertile. This allowed the Jeffs to sell grass and hay from the land from 2002 to the date of disposal in 2005.
  5. As the proceeds from the sale of the land didn’t exceed €1000000 Retirement Relief was available to Jazzy and Steph. So, the disposal did not give rise to CGT.

Revenue Response

Revenue responded on the 25th of February 2016. They confirmed that to qualify for Retirement Relief the chargeable business assets.

  1. Must have been owned and used by each individual during the 10-year period ending with the disposal

Their letter noted that Jazzy had ceased for Income Tax on the 11th of November 1998. They looked for evidence of the business undertaken from November 1998 to the date of sale in June 2005.

Donald replies

On the 14th of March 2016, Donald wrote to Revenue and confirmed the following.

  • By deregistering for Income Tax in November 1998 and not making Income Tax returns on a loss-making business did not prevent him from claiming Retirement Relief.
  • Because they owned the land in joint names the relief can be available to both. This is on the proviso that both meet the necessary conditions.

Revenue wrote back to Donald on the 23rd of March 2016. They looked for documentary evidence that a commercial partnership existed between the Jeffs. It was their opinion that having a joint bank account didn’t show that they were both involved in running the business.

Donald didn’t reply. So, Revenue issued a CGT assessment for 2005 with a draft liability of €137915. Plus, interest and penalties, of course!

Case for Revenue

Revenue stressed that the land must be used for farming purposes and not just owned for the purposes of farming. Their view was that the land wasn’t used for farming after 1998 on the following grounds.

  1. Jeff had ceased from Income Tax in November 1998
  2. There is an absence of farming accounts/records between 1998 and 2005
  3. The bank statements submitted by Jazzy are not evidence of farming activity
  4. After the deer sales in 2001 there was no record of them remaining on the land as claimed
  5. The sale of grass from the land is not enough to establish, on the balance of probabilities, that farming occurred.
  6. There is no evidence that a partnership existed between Jazzy and Steph in relation to the farm.


Both sides were happy that there was farming until Bambi and co departed in 2001. The Appeal Commissioner [AC], had to decide on two main points.

  • Did the Jeffs farm the land after 2002 and
  • Did they farm the land in partnership?

Jazzy submitted a letter from his neighbouring farmer dated the 4th of August 2022. In that letter, the farmer confirmed he purchased hay, silage, and grass from the Jeffs from 2002 to 2005. For this they got paid by cheque and those cheques were lodged to the joint account of the Jeffs. They submitted bank statements as evidence of this.

Revenue responded that the lands were let to the neighbouring farmer. The Jeffs denied this. They confirmed that the neighbouring farmer didn’t have access to the land. The only access he had was to harvest the grass.

The AC looked at the definition of farming which is

“Farming farmland, that is, land in the State wholly or mainly occupied for the purposes of husbandry, other than market garden land”

She found that the production of grass for silage and hay is husbandry. As such it meets the definition of farming. So, she was happy that there was farming from 1993 to 2005 up to the date of disposal of the land. One nil to the Jeffs.

Steph gave evidence that the deer farming enterprise was a new activity for both her and her husband. Despite that, they learned how to look after the deer together. She assisted with the fencing and management of the land together with her husband as well as caring for the deer.

Based on the evidence the AC accepts that, on the balance of probabilities, Jazzy and Steph both farmed the land from 1993 to 2005. She was happy that Steph carried out substantial work on the farm during that period. Work that was similar in nature to the work that her husband did. Two nil to the Jeffs.

Outcome. The tax liability reduces to nil.

Key Learnings

There are so many key learnings about Retirement Relief for business owners, but the ones that spring to mind for me are

Income Tax return

Continue to file tax returns even if your business isn’t profitable. It shows you have a trade. Don’t file your own return. Get your advisor to do it and make sure it’s right.


If there’s a genuine partnership then file a partnership return. Also have partnership accounts, a joint bank account, and a partnership tax number.

Business structure

This case applied to land. It can also apply to shares in a family company. Is the shareholding structure of your company right? If the shareholding is split 50:50 would both shareholders get Retirement Relief?

Retirement Relief

You must be over 55 to claim it and meet the conditions. There are two versions of the relief. One is when you transfer assets within your family. The other is when you dispose of assets to a third party. The relief dilutes when you are 66 or older so plan ahead.

Two claims are better than one 

Two claims are better than one. Retirement relief we saw was up to €1000000 for the Jeffs or €500000 each. Since 2005 the €500000 threshold has increased to €750000. That could be €1500000 for a husband and wife once they meet the conditions.

Plan to Sell

Plan to sell your business even if you don’t. With a good plan in place, a strong business, and good financials you will maximise the value. If you don’t sell there will be other options to get money out.

Do you know if you could claim Retirement Relief on a business sale or transfer? If not, Start here


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