Punchestown Racecourse has unpaid tax liabilities of at least €750,000 after it incorrectly claimed relief on VAT in the late 1990s, an independent review commissioned by Horse Racing Ireland has found.
The racecourse has been brought back from the brink of bankruptcy, and is expected to make a profit of 140,000 this year.
However, deficiencies have been identified in previous corporate structures established in 1997 to aid a major redevelopment of Punchestown as the home of national hunt racing in Ireland.
The racecourse, which is owned by the Kildare Hunt Club, also received over 25 million in funding from State organisations to aid the development, along with a loan of nearly 4 million from the Getty family as part of the passports for investment scheme. The unpaid tax bill, and how to deal with it, has led to an eight-month delay in implementing new structures as part of a rescue plan for the racecourse, which came close to closure last year after serious financial difficulties were uncovered by its board.
An interim committee is currently divided on the best approach to take on tackling the tax liability issue. Some members examining the issue are concerned the potential liability could be higher than €750,000 with interest and penalties.
A spokesman for the State horse-racing body, Horse Racing Ireland (HRI), which is now overseeing the day-to-day management of the course and its overall future, confirmed there were unresolved tax issues. "Horse Racing Ireland has taken a decision to work with the Kildare Hunt Club to ensure the continued future of Punchestown," the spokesman said.
As part of that, HRI "brought in experts to assess taxation and other issues, and is now insisting the taxation issue be settled with the Revenue Commissioners".
It is understood that accountants Deloitte and Touche, who were brought in by HRI to look at the matter, concluded the racecourse had a VAT liability of 750,000, and that negotiations should be opened with the Revenue Commissioners.
The potential VAT liability was first identified by businessman, Mr Nick Bullman and solicitor, Mr John Ross, who were both instrumental in uncovering the previous financial problems at the racecourse. Mr Bullman and Mr Ross are members of the Kildare Hunt Club, and became chairman and secretary respectively of the racecourse in 2001 after they raised concerns about the solvency of the course.They brought in auditors PriceWaterhouseCoopers in 2002, which re-examined the accounts. The audit criticised the accountancy and financial procedure records previously in place at the course and the accounts also showed the course to be in a perilous financial position, with a negative equity of more than €1 million, debts of over 7 million and accumulated losses of more than 4 million.
HRI put forward a rescue package which was agreed for the course. It involved the establishment of a new company, jointly owned by HRI and the Kildare Hunt, which would operate the racecourse. The club would then use any profits to gain back full control of the course. An interim committee to implement the package, including members from both HRI and the club, including Mr Bullman and Mr Ross, was put in place.