Investment of €14.9m in fishing capacity does not attract capital tax allowances, court rules

Companies operating from Donegal modified vessels after buying the capacity of the Atlantic Dawn

A €14.9 million investment to provide two fishing companies with greater capacity for catches does not attract capital tax allowances, the High Court has ruled.

In 2015, Mullglen Ltd and OIgarry Ltd, which operate trawlers out of Killybegs, Co Donegal, bought the fishing capacity of the Atlantic Dawn, a vessel owned by another company, for €14.9 million.

The companies then modified two of their own fishing vessels to increase their tonnage and power.

However, when they sought to claim capital allowances under the Taxes Consolidation Act 1997 for spending the money on acquiring the fishing capacity, Revenue refused the claim.


They appealed the refusal to the Tax Appeals Commission.

Revenue contended that the purpose of the intangible asset provision was to support the development of the knowledge economy by encouraging companies to locate the management and exploitation of their intellectual property in the State. It did not apply to the fishing industry, it said.

The companies argued that fishing capacity was a “specified intangible asset’ within the meaning of the tax law providing for capital allowances.

Among their arguments were that the acquisition of liquor licences had previously been included as an intangible asset for tax purposes, which implied it was not limited to the field of intellectual property or the knowledge economy.

The Tax Appeals Commission found with the companies. It determined that the fishing capacity acquired by the companies came within the meaning of the intangible asset provisions and the refusal of the capital allowances “should not stand”.

Revenue was unhappy with this and asked for a case to be stated to the High Court on a number of legal questions relating to the definition of intangible asset.

In a judgment, Ms Justice Emily Egan ruled against the Tax Appeal Commissioner’s decision. She found, among other things, that fishing capacity, or a sea-fishing boat licence, or a combination of the two, did not fall within the definition of intangible asset.