The Supreme Court has dismissed an appeal by Rossaveal fisherman Sean Flaherty over a €130,000 Capital Gains Tax assessment arising from the €5 million sale of the fishing vessel Glór na dTonn.
The dispute centred on when the vessel was legally treated as disposed of for tax purposes. Flaherty signed an agreement on 21 October 2015 to sell the vessel, its equipment, spare parts and fishing capacity to Antarctic Polyvalent Fishing Company Limited of Killybegs.
Flaherty argued that the contract was conditional because further regulatory steps were required, including transfer documentation, registration of the vessel and the issue of a sea-fishing licence to the purchaser. Those processes were not fully completed until January 2016.
That distinction mattered because revised entrepreneur relief became available for qualifying disposals from 1 January 2016. The relief would have reduced Capital Gains Tax to 20% on the first €1 million of qualifying gains instead of the ordinary 33% rate.
Mr Justice Brian Murray, delivering judgment for the Supreme Court, held that the agreement was not a conditional contract within the meaning of section 542 of the Taxes Consolidation Act 1997.
The court said the relevant test is whether there was already a binding contract to sell the asset, or whether no obligation to sell or buy arose until a specified future event occurred. Here, the parties had entered a binding agreement in October 2015 and the later licensing and registration steps did not postpone the existence of the sale obligation.
The court also rejected an argument that such a condition should be implied into the contract to give it business efficacy. Any implied term must be necessary, the judgment said, and obtaining a later tax advantage was not a commercial necessity.
The appeal was dismissed, leaving intact the Tax Appeal Commissioner's conclusion that the disposal occurred in 2015 and that the €130,000 relief claim was unavailable.