The High Court has upheld the Tax Appeals Commission’s decision that a fisherman’s sale of a fishing vessel was made in 2015 for capital gains tax purposes, rejecting his appeal on a point of law.
The case concerned a memorandum of agreement signed on 21 October 2015 for the sale of the vessel and its related fishing capacity-tonnage. Revenue assessed capital gains tax of €130,000 for 2015. The fisherman argued the sale was conditional and that the disposal date was 11 January 2016, when the relevant paperwork was completed. That date would have placed the sale in the tax year eligible for entrepreneurial relief.
The High Court considered whether the agreement’s completion documents, including confirmation of fishing entitlements, made the contract conditional under section 542(1)(b) of the Taxes Consolidation Act 1997. The agreement required payment of the balance of the purchase price in exchange for completion documents. But it did not say the sale was subject to obtaining those documents or any other specific event, the court found.
The judge also considered a bill of sale signed on 21 December 2015. It acknowledged receipt of €5 million and the transfer of 64 shares in the vessel and its appurtenances. The court said the agreement’s documentation requirements were procedural and related to transferring the vessel, rather than conditions governing whether the contract took effect. It therefore found the agreement was not a conditional contract for tax purposes.
The High Court answered five of the six questions in the case stated in the negative, finding no error in the Commissioner’s conclusions. It answered one question in the affirmative: the Commissioner had misstated the process for transferring fishing rights. The actual procedure was for the vendor’s rights to be surrendered and equivalent rights given to the purchaser. The judge said this correction had no impact on whether the agreement was conditional.
The court did not disturb the Commissioner’s determination that the disposal took place in the 2015 tax year and that the assessment should stand. The appeal was rejected.