Racing Board v Ó Culacháin

• Jurisdiction: Ireland
• Judge: Justice Murphy
• Judgment Date: 27 April 1988
• Neutral Citation: 1988 WJSC-HC 1659
• Date: 27 April 1988
• Court: High Court
• Docket Number: No. 1147R/1987

1988 WJSC-HC 1659

THE HIGH COURT

No. 1147R/1987

RACING BOARD v. O CULACHAIN

BETWEEN

THE RACING BOARD

APPELLANT

AND

S. O'CULACHAIN

RESPONDENT

Citations:

INCOME TAX ACT 1967 S428

RACING BOARD & RACECOURSES ACT 1945 S4

RACING BOARD & RACECOURSES ACT 1945 S14

RACING BOARD & RACECOURSES ACT 1945 S15

RACING BOARD & RACECOURSES ACT 1945 S27(1)

EXPORT LIVE STOCK (INSURANCE) BOARD V CARROLL 1951 IR 286

SEVERN FISHERY BOARD V O'MAY 1919 2 KB 484

COMMISSIONERS OF INLAND REVENUE V FORTH CONSERVANCY BOARD 1931 AC 540

MOVILLE DISTRICT BOARD OF CONSERVATORS V UACLOTHASAIGH 1950 IR 301

BBC V JOHNS 41 TC 471

FINANCE ACT 1926 S24

INCOME TAX ACT 1967 S537

Synopsis:

REVENUE

Income tax

Assessment - Liability - Public corporation - Statutory functions - Collection of levies - Racing Board - Levies payable in respect of course bets made by bookmakers - The appellant Board was incorporated pursuant to s. 4 of the Act of 1945 - That Act was passed for the purpose of providing for the improvement and development of horse breeding and horse racing, to make provision in relation to bookmakers engaged in course betting, to impose levies on bookmakers in respect of course bets and to provide for other connected matters - Subject to certain conditions and consents, the appellants were empowered by s. 14 of the Act to establish, equip and maintain racecourses, and to organise and hold race meetings at any racecourse maintained by the appellants pursuant to that section - The appellants had not exercised their powers under section 14 - The income of the appellants derived from totalisators operated by them pursuant to s. 15 of the Act, and from levies paid to the appellants by licensed bookmakers (pursuant to s. 27 of the Act) in respect of course bets made by such bookmakers - Section 27, sub-s. 1, of the Act of 1945 states:- "Every person who, as a licensed bookmaker, enters into a course bet on or after the commencement of this section shall pay to the Board a levy calculated at the rate of the prescribed percentage for the time being of the amount of such course bet" - It was common case that the appellants” profits from their operation of totalisators were assessable to income tax under Case I of Schedule D of the Act of 1967 - The appellants contended that the levies paid to them pursuant to the Act of 1945 by licensed bookmakers were not assessable to income tax either under Case I or Case IV of Schedule D - The special commissioners stated a Case for the opinion of the High Court pursuant to s. 428 of the Act of 1967, and their question was:- "…whether we were entitled on the foregoing facts and evidence to hold that the Board was assessable to tax in respect of levies on course bets by bookmakers on the basis that this was an activity analogous to a trade; and, if so, how should such levy be taxed" - Held that the scheme of the Act of 1945 was to create the appellant Board as an agency for the collection of levies from licensed bookmakers in respect of their course bets for the purpose of creating funds which were applicable, after the payment of expenses, to the improvement and development of horse breeding and horse racing - Held that in those circumstances, and in view of the fact that the appellant Board did not render any service to the bookmakers, the surplus of such levies received by the appellants after the payment of expenses were not profits of a trade or of an activity analogous to a trade: ~Exported Live Stock (Insurance) Board v. Carroll~ [1951] I.R. 286; ~Severn Fishery Board v. O” May~ [1919] 2 K.B. 484; ~Ua Clothasaigh v. Moville District Board of Conservators~ [1950] I.R. 301 and ~British Broadcasting Corporation v. Johns~ [1965] Ch. 32., 41 T.C. 471 considered - Racing Board and Racecourses Act, 1945, ss.4, 14–16, 27 - Income Tax Act, 1967, ss. 1, 428 - (1987/1147 R - Murphy J. - 27/4/88)

|Racing Board v. O'Culachain|

WORDS AND PHRASES

"Trade"

Public body - Statutory functions - Collection of levies - Racing Board - No services rendered - Levies payable by licensed bookmakers in respect of course bets made by them - Income of Racing Board applicable to development of horse breeding and horse racing - Profits of Board not derived from a trade or from activity analogous to a trade - ~See~ Revenue, income tax - (1987/1147 R - Murphy J. - 27/4/88)

|Racing Board v. O” Culachain|

1 Judgment of Mr. Justice Murphy delivered the 27th day of April 1988.

2 This is an appeal by way of Case Stated from a decision given on the 12th October 1983 by Mr. C.V.B. Diggin and the late D.U. O'Neill the then Appeal Commissioners. The question posed in the case, which is stated under section 428 of the Income Tax Act 1967, is expressed in paragraph 11 thereof in the following terms:-

"The question of law for the opinion of the High Court is whether we were entitled on the foregoing facts and evidence adduced to hold that the Board was assessable to tax in respect of levies on course bets by bookmakers on the basis that this was an activity analogous to a trade: and if so how should such levy be taxed".

3 It is of course necessary to put that question in context.

4 The Racing Board (hereinafter referred to as "the Board" was established and incorporated by virtue of section 4 of the Racing Board and Racecourses Act 1945. The preamble to that Act is particularly informative. It provides as follows:-

"An Act to provide for the improvement and development of horse breeding and horse racing and for the better control of racecourses, and for this and other purposes to establish a Board to be called the Racing Board, to define its powers and duties, to make provision in relation to bookmakers engaged in course betting and to impose levies on bookmakers in respect of course bets, to dissolve the Board of control for mechanical betting in Ireland and to transfer its property and liabilities to the Racing Board, to authorise the Irish Turf Club and the Irish National Hunt Steeplechase Committee to exclude persons from racecourses, and to provide for certain other matters connected with the matters aforesaid".

5 Under section 14 of the 1945 Act the Board may, subject to certain conditions and consents establish, equip and maintain racecourses and organize and hold racemeetings thereon. As I understand it the Board has never attempted to exercise that power. The income of the Board derives from two distinct provisions in the Act, namely, section 15 which empowers the Board to apply for and hold a totalizator licence and section 27 (1) which provides for the payment of certain levies to the Board. That subsection is expressed in the following terms:-

"Every person who, as a licensed bookmaker, enters into a course bet on or after the commencement of this section shall pay to the Board a levy calculated at the rate of the prescribed percentage for the time being of the amount of such course bet".

6 The amount of the levy is determined by the Board with the consent of the Minister but limited to a prescribed figure.

7 The Act contains detailed provisions enabling the Board to grant permits to licensed bookmakers permitting them to carry on business at racecourses which are authorised within the meaning of the Act and other provisions relating to the admission by the owners of those racecourses of bookmakers to the racecourses. In addition the Act empowers the Board to make regulations, in certain cases with the consent of the Minister for Finance, relating to the payment of levies and otherwise for the purpose of carrying out the provisions of the Act.

8 The Board holds and has for many years held a totalizator licence and has derived substantial income from its operation of a totalizator. The other source of finance available to the Board consists of the receipts received from the licensed bookmakers by way of levy on the "on course" bets taken by them.

9 It is common case that the profits derived from the operation of the totalizator are liable to income tax under Case I of Schedule D of the Income Tax Act 1967. However, the Board have contended that the levies payable to them by the licensed bookmakers are not liable to income tax either under Case I or the present Case IV of Schedule D aforesaid. It is that contention on behalf of the Board which was rejected by the Appeal Commissioners. In the Case...