Trustpower have lost a Supreme Court appeal against the Inland Revenue Department which could see them paying millions of dollars in tax.

The court found in favour of the Inland Revenue Department's appeal on whether Trustpower which spent $17.7 million on resource consent for four projects was tax deductible.

The projects are a hydro scheme at Arnold River on the South Island's west coast, a Southland wind farm, a hydro project on the Wairau River and a wind farm near Dunedin.

In 2011, Trustpower filed court action against Inland Revenue saying the $17.7 million spent on the projects in 2006, 2007 and 2008 were tax deductible. Justice Pamela Andrews found in favour of the company.

However, Inland Revenue appealed the decision last year and it was overturned. It was then taken to the Supreme Court by Trustpower and a decision this morning was found in favour of the Inland Revenue.

In a press summary released this morning, Inland Revenue argued the consents were 'intangible” capital assets and therefore what was spent in applying and getting consent was tax deductible.

Trustpower argued that expenditure in relation to a capital project is on revenue account and therefore deductible up to the point at which the taxpayer commits to completion of the project.

It is understood the decision could cost the electricity company almost $15 million in tax and interest and court costs.

Trading in Trustpower shares were halted this morning until this morning's decision.