This content is from: Ireland

Reform of the tax appeal process in Ireland

Taxpayers and practitioners have until the end of January to respond to a consultation on the reform of how tax appeals take place in Ireland.

The Appeal Commissioners is a statutory body appointed by the minister for finance under Irish tax legislation.The Appeal Commissioners are responsible for carrying out their statutory functions, principally the hearing and determining of appeals by taxpayers against decisions of the Revenue Commissioners (Revenue).

Where the taxpayer disagrees with an estimated assessment raised by Revenue they have a statutory right to appeal the matter to the Appeal Commissioners. Hearings before the Appeal Commissioner are conducted in camera. The burden of proof rests on the taxpayer to prove the assessment is incorrect. The standard of proof is the balance of probabilities; in practice this burden can prove very onerous on the taxpayer. For the hearing itself, written submissions are generally received by the Appeal Commissioners on behalf of Revenue and the taxpayer. Parties may be represented by legal or tax professionals.

What is wrong with the system
The system has become inadequate to provide an effective and efficient appeals process; at present it can take up to 10 years to run a tax appeal through the various stages to the Supreme Court. This is clearly an unsatisfactory situation for both the taxpayer and Revenue.

The main problems with the system are:

  • delays;
  • independence; and critically,
  • the absence of written records or publication of decisions which prevent decisions being used for guidance purposes.

Under the system there is a lack of information and transparency about how the appeal system operates. Clear, user-friendly published guidelines would assist taxpayers who wish to represent themselves and would also lead to consistent approaches on how the hearing should be conducted.

Under the system the taxpayer’s written notification of appeal must be submitted to Revenue. The Irish Tax Institute has previously proposed by that to preserve the independence of the process, this should be submitted directly to the Appeal Commissioners.

Under the system it can take up to nine months to get a date for hearing. If the hearing runs over its estimated time the case may be put back for another nine months, leaving the highly unsatisfactory situation of a second or third day of a hearing being heard half a year after the first day of the hearing.

The pivotal problem with the system is that no written decisions are published. This means no body of decisions is available to practitioners for guidance in determining how a particular legislative provision was determined in a particular situation.

Consultation
In response to numerous calls from professional bodies, the Department of Finance announced a review of the tax appeal process in the 2014 Budget. The consultation process has begun, and the Department is seeking submissions from interested parties before the end of January 2014.

It is proposed that:

  • to deal with the problem of delay, three full-time appeal commissioners be appointed in addition to a panel of suitably qualified applicants who would hear cases on a per case basis.
  • the Appeal Commissioners be responsible for developing processes and guidance to alleviate delays in the system and to develop customer service standards;
  • to underline the independence of the Appeal Commissioners, the body be established on a formal statutory basis to manage the tax appeal process independently;
  • the Department of Finance would have the authority to extend the jurisdiction of the Appeal Commissioners;
  • in relation to the crucial issue of the detail and publication of the determinations of the Appeal Commissioners, a concise reasoned determination, including a summary of facts and reasons for the determination, be issued to the parties within three months;
  • an effective system of reporting the decisions be established and every appropriate decision be published; and
  • the relevant tax or duty should be paid or repaid at the end of each stage of the appeal process.

A key theme of the proposals is that the Appeal Commissioners be suitably resourced and staffed to carry out its functions independently.

Awaiting outcome
The consultation process is a positive step in reforming our tax appeal system. Only time will tell if it is successful.

Martin Phelan (martin.phelan@williamfry.ie), William Fry Tax Advisors - Taxand Ireland

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