Ryanair wants airline bid Vat refund

Ryanair claims it should be refunded €770,000 in Vat for professional services related to its unsuccessful 2006 bid to take over Aer Lingus, the High Court has heard.

The airline is appealing a decision of a Revenue Commissioners that the legal and stockbroking fees incurred in the takeover bid did not relate to its core economic activity of air transport and was, therefore. not Vat-deductible.

In Oct 2006, Ryanair succeeded in acquiring 29% of Aer Lingus but failed to get a 100% shareholding due to a number of factors, including conditions imposed by the EU Competition Authority as well as resistance by the Government and trade union shareholders in Aer Lingus.

Ryanair applied to claim Vat on the professional fees incurred in the bid as deductible, but a Revenue appeals commissioner refused to allow it to do so.

It appealed that decision to the Circuit Court where, in May 2011, Judge Jacqueline Linnane dismissed the appeal saying the professional fees were not part of its general business.

Yesterday, Martin Hayden, counsel for Ryanair, argued before the High Court that Judge Linnane had erred in law on a number of grounds including that his client had provided evidence that it did not intend to hold shares in Aer Lingus as a passive investor, which would have constituted a “non-economic activity” for the purposes of Vat deduction.

It was its intention to carry out management services in Aer Lingus which was a “Vatable activity” and the fact that it was unable to do so due to factors outside its control was not relevant to the question of Vat deduction, counsel said. There were also European Court of Justice and High Court decisions which found the intention to carry on “Vatable activity” was sufficient to secure a deduction.

Ms Justice Mary Laffoy reserved her decision.