The High Court has ruled that professional horse racing can qualify as an athletic sport under the tax exemption for sporting bodies. It set aside the reasoning behind the Tax Appeals Commissioner’s refusal of Listowel Race Company Ltd’s application, but did not grant the exemption itself.
In a judgment delivered on 22 April 2022, Ms Justice Baker answered a case stated by the Commissioner. The appeal concerned the company’s application under section 235 of the Taxes Consolidation Act 1997 for an exemption from corporation tax on qualifying income.
The company provides the Listowel racecourse and facilities in County Kerry, and holds race meetings in June and September. The Commissioner had concluded that it was not established for the sole purpose of promoting sport. He considered that Horse Racing Ireland (HRI) controlled the racing and that the company received significant income from ancillary activities.
Justice Baker said the Commissioner was entitled to consider the company’s income as evidence of its purpose, but it was not decisive. The company’s memorandum identified promoting and organising horse racing at Listowel as its primary objective. Evidence before the Commissioner was that the company paid no dividend and applied its income to maintaining and developing the facilities.
The judge found that the Commissioner had failed to distinguish HRI’s role as regulator from the company’s role in conducting racing at the course. She also said he had not properly considered what it meant for the company to promote the activity, including how it used its income. The conclusion that the company did not exist for the sole purpose of promoting sport was, she held, based on an inadequate analysis and a mistake of law.
On the remaining questions, the court held that the exemption was not confined to amateur sport and that horse racing is a sport and an athletic sport. The judge said breeding and training horses were ancillary to the competitive riding that takes place in a race. She also rejected the view that racing’s connection with an industry prevented it from being treated as sport.
The decision did not determine that Listowel Race Company meets every condition for exemption. The case stated was answered “No” to whether the Commissioner was correct that the company did not exist for the sole purpose of promoting athletic games or sports; the second question did not arise; and the answers on whether professional sport could qualify, and whether horse racing is a sport and an athletic sport, were “No”, “Yes” and “Yes”.