The High Court has ruled that fishing capacity acquired by two fishing companies did not qualify for capital allowances under the statutory provision they relied on. The ruling answered questions of law referred by the Tax Appeals Commission (TAC), which had previously allowed the companies’ appeals against Revenue’s refusal of the allowances.
Mullglen Limited and Olgarry Fishing Company Limited acquired additional fishing capacity in 2015 to allow two vessels operating out of Killybegs to be licensed and operated. They paid €7.325 million and €7.575 million respectively for capacity associated with the Atlantic Dawn. The companies also modified and extended their vessels. There was no dispute that expenditure on those vessel works could be deducted over eight years; the dispute concerned the separate cost of the fishing capacity.
The companies argued that the capacity was an intangible asset qualifying under section 291A(1)(h) of the Taxes Consolidation Act 1997. That provision covers certain authorisations needed to sell a medicine or a product of a design, formula, process or invention. Revenue argued that fishing capacity was not such an authorisation and that the companies’ fishing activity did not bring the catch within the provision.
The TAC accepted the companies’ claim in 2021, finding that without the requisite fishing capacity the fish could not be sold for its intended purpose. Revenue then sought the High Court’s opinion through a case stated. The High Court’s role was to answer legal questions, not to retry the facts.
Justice Emily Egan held that the provision concerns authorisations for products as designed, formulated, processed or invented, rather than authorisations for raw materials that might later be processed. Fishing capacity, a sea-fishing boat licence, or both together authorised commercial fishing and the harvesting of living aquatic resources. They did not authorise a later product or govern the purposes for which harvested fish might be used.
The judge said the TAC had not adequately addressed what product and intended purpose were covered by the claimed authorisation, and had changed the statutory wording in its analysis. She answered “yes” to questions asking whether the TAC erred in finding that fishing capacity qualified and in its interpretation of the provision. She answered “no” to questions about the TAC’s treatment of customer lists and its reasons on the meaning of “company” and “trade”.
The judgment did not determine whether the companies processed the fish aboard their vessels. Justice Egan said that issue would not affect her conclusion. She also said the alternative claim under another part of section 291A and a dispute about the boat licence were not resolved by the TAC; she would hear the parties on whether any issues still needed to be remitted. The court listed the matter for final orders and costs on 23 November 2023.