The former owner of the disused Lisheen zinc and lead mine in Co Tipperary has successfully fought a nearly £40million corporate tax bill from the Revenue Commissioners.
It follows a lawsuit accepted by an Irish company – Lisheen Milling – controlled by Indian mining group Vedanta, following a more than decade-old tax claim filed by Revenue.
Revenue made claims to Lisheen Milling in 2011. These claims covered the years 2006 to 2011 and totaled EUR 36 million. The highest single claim was €11.4 million for 2007.
The names of the bodies involved in the complaint have been redacted, but the Irish Independent determined that they are vehicles associated with the Lisheen mine.
The Lisheen lead and zinc mine began production in about 1999. The property was discovered by Chevron Mineral Corporation. Irish mining company Ivernia West has signed up as a joint venture partner. Chevron later sold its stake to an Anglo American subsidiary.
Ivernia West sold its 50 percent stake to Anglo in 2003, while Anglo American sold its entire operation to Vedanta in 2010.
The development of the Lisheen mine and a surface facility known as a concentrator cost up to €200 million. However, it generated significant returns for the companies behind it.
A number of important points were raised during Lisheen Milling’s appeal, but it revolved around one main issue.
That core issue, the Tax Appeals Commission found, was Lisheen Milling’s claim for exemption from corporation tax in relation to the processing of zinc and lead concentrate on the mine premises.
“In summary, the eligibility for manufacturing credit would entitle the complainant to be taxed at the reduced rate of 10 per cent on its profits,” the commission found.
Another important question was whether Lisheen Milling’s zinc and lead concentrate processing revenue qualifies as mining revenue. Such operations are excluded from manufacturing facilitation under the relevant legislation.
Lead and zinc ore recovered from mines is processed at surface in facilities that separate the respective metals into a concentrated form that can then be shipped.
The Tax Appeals Commission found that Lisheen Milling’s activities at the surface facility were separate from those of the partnership that operated the actual mine, meaning that Lisheen Milling was eligible for manufacturing relief.
“I find that the complainant was overcharged on corporate tax as a result of the change in assessment,” observed the Appeals Commissioner.
The Lisheen mine ceased operations in late 2015 after its reserves were depleted.
The appeal said that in the years prior to mining ceasing, a total of approximately €10 million was spent prospecting in the area in hopes of discovering another orebody that would feed the processing plant once the existing mine was completed would have run. However, this search was unsuccessful.
