The purpose of the Bill is to provide for reforms of the role, functions and structure of the Office of the Appeal Commissioner and the tax appeals system. The overall objective is to ensure an enhanced and cost-effective appeal mechanism for tax cases, while providing transparency and increased certainty for taxpayers. The Appeal Commissioners are responsible for carrying out the statutory duties assigned to them under the Taxes Consolidation Act 1997 and related legislation, principally the hearing of appeals by taxpayers against decisions of the Revenue Commissioners concerning taxes and duties. The commissioners hear appeals relating not only to income tax, but also to corporation tax, value added tax or VAT, capital gains tax, stamp duties, capital acquisitions tax, customs and excise duties, vehicle registration tax and local property tax. Most appeals relate to the amount of an appellant's tax liability.
As is appropriate for an administrative tribunal, the Appeal Commissioners are independent in carrying out their functions. I acknowledge the valuable role the commissioners play in the operation of a fair and efficient taxation system. Mr. Ronan Kelly recently retired as an Appeal Commissioner, having served in that role for over 20 years. I understand the term of the other commissioner of long standing, Mr. John O'Callaghan, will end in a few days. On behalf of the Minister, Deputy Michael Noonan, I thank both for their diligent service since the early 1990s. I am pleased that, following an open competition conducted by the Public Appointments Service, Mr. Mark O'Mahony took up his post as Appeal Commissioner on 9 November last. Ms Lorna Gallagher will commence as Appeal Commissioner in the next few days. I look forward to both playing a central role in the reform of the appeals system and I wish both well in their work.
The tax appeal system has been examined over the years and the following reports and tribunals have made recommendations about the Appeal Commissioners in that time: the steering group on the Revenue Commissioners; the Dáil Committee of Public Accounts final report on the DIRT inquiry; the Revenue powers group report; the Law Reform Commission report on a fiscal prosecutor and a revenue court; and the Commission on Taxation report. Proposals for changes to the appeals system have been made by stakeholders, including the professional representative bodies, such as the Irish Tax Institute and the accountancy bodies.
The Minister announced in budget 2014 his intention to instigate a reform of the appeal system for tax matters, including reform of the role, functions and structure of the Office of the Appeal Commissioner. The Bill represents the culmination of a process that involved constructive dialogue with stakeholders on the oversight and operation of the tax appeals system towards a common objective of reform to enhance the system for all participants.
The reforms proposed will bring appeals through the initial stage in a more streamlined fashion, with enhanced case management procedures to facilitate a more efficient and structured flow of appeals. The proposed reforms in the Bill will end the practice of appeals being made via the Revenue Commissioners and will involve a significant change to the process for appeals by way of the "case stated" procedure for the High Court, and the removal of the Circuit Court rehearing stage of the appeal process. This issue was the subject of much debate in the other House and I expect it to be the subject of some debate in the Seanad. The Minister remains convinced that, with the strengthening of the roles and procedures for the Tax Appeals Commission and given trends in relation to other expert administrative tribunals, retention of the Circuit Court stage of the appeals process would be anomalous. There are also opportunities for redress in certain circumstances by way of judicial review and appeal to the Court of Justice of the European Union.
In accordance with the agreed protocol for pre-legislative scrutiny by Oireachtas committees, the heads of Bill were sent to the Joint Committee on Finance, Public Expenditure and Reform, which issued its report on 16 April last. Following consideration of the report of the joint committee and concerns expressed by stakeholders prior to and during the pre-legislative scrutiny process, the Minister decided to change the provisions in the heads of Bill regarding public hearings of tax appeal cases. The heads had envisaged that hearings before the Appeal Commissioners, heretofore held privately or in camera, would in future he held in public session following enactment of the legislation. While the default position will still be for public hearings, the Bill has been drafted to provide that where an appellant requests it, the hearing of his or her tax appeal will be held in private. I consider that this provision will meet the concerns of the committee and stakeholders, although I appreciate that diverse views were expressed. The committee considered that transparency, which had been one of the objectives of the original public hearings proposals, would be enhanced and clarity provided to taxpayers and the general public if all hearings were accompanied by written determinations, as is proposed.
The key elements of the Bill are as follows: the establishment and structure of the commission; the appointment and removal process for Appeal Commissioners; the terms and conditions of Appeal Commissioners; the provisions for staffing and funding of the commission and its accountability; a new Part 40A of the Taxes Consolidation Act 1997, providing for a wide range of amendments to the legislation governing appeals in regard to the various taxes under the care and management of the Revenue Commissioners; and a schedule of consequential amendments to the various tax and duty Acts arising from reform measures and from the effect of the new Part 40A. The main thrust of the reform is to strengthen the independence, and the perceived independence, of the Appeal Commissioners. The measures to achieve this contained in the Bill include appropriate selection and appointment provisions involving the Public Appointments Service, fixed-term appointments, a clear statutory statement of independence, new funding and staffing arrangements and the making of appeals directly to the Appeal Commissioners, and not Revenue, as currently happens.
The Bill is in five Parts and has two Schedules. I will outline the provisions of Part 2 in some detail. As the provisions of the subsequent sections are extensive and complex, I will give an overview of their essential components. I am aware that Members of the Seanad may wish to address some specific issues on Committee and later Stages.
Part 1 is preliminary and general. It contains standard provisions comprising the Short Title and commencement provisions, together with interpretations and definitions for the Bill.
Part 2 contains provisions relating to the establishment of the tax appeals commission, its membership and functions and the appointment, terms and conditions of the individual Appeal Commissioners and their staff.
The more important of these provisions are described as follows.
Section 6 sets out the functions of the Appeal Commissioners with regard to the acceptance, refusal, adjudication and determination of appeals, the conduct of hearings, the provision and publication of determinations, the stating and signing of cases for the High Court and the establishment of efficient and effective systems and procedures for the processing of appeals. The commissioners are required to conduct appeal proceedings in a way that is accessible and fair and as expeditious as possible. The functions of the commissioners can be performed by any one of them acting individually, unless they have provided otherwise in their rules of procedure.
Section 8 deals with the appointment of Appeal Commissioners. The Minister is required to have the Public Appointments Service assess and select candidates for appointment as commissioners and to recommend suitable candidates to the Minister. The Minister is given powers to specify requirements with which candidates must comply, such as practical experience or academic qualifications. The Minister is permitted to appoint a serving commissioner for a second term, without recourse to the Public Appointments Service, where the commissioner’s first term of office has expired. A commissioner is precluded from serving for more than two consecutive seven-year terms.
Section 9 provides for temporary commissioners in cases where the full-time commissioners have recused themselves. In such cases, the Minister can appoint a Circuit Court judge as a temporary commissioner. The Minister can also appoint a person as a temporary commissioner in non-recusal situations where circumstances require such an appointment, for example, in a situation where there has been a significant increase in appeals and a temporary commissioner is required to help deal with it.
Section 10 establishes the independence of the tax appeals commission and its Appeal Commissioners in the performance of their functions. Section 13 provides that the term of office of Appeal Commissioners will be seven years, with scope for the Minister for Finance to reappoint a commissioner for a second and final seven-year term.
Section 17 provides for the Minister’s powers to remove commissioners from office for stated reasons, subject to the Minister laying a statement before the Dáil giving the reasons for any such removal.
Section 18 provides for the cessation of a commissioner’s tenure where she or he is adjudicated a bankrupt, makes a composition or arrangement with creditors, is convicted of an offence or ceases to be ordinarily resident in the State. The section also provides for the cessation of a commissioner’s tenure on his or her nomination or election to various public offices such as the Oireachtas, a local authority or the European Parliament.
Section 19 provides for the funding of the commission to be as determined by the Minister for Public Expenditure and Reform.
Section 20 provides that staff numbers of the tax appeals commission are to be determined by the Ministers for Finance and Public Expenditure and Reform.
Section 21 requires the Appeal Commissioners to submit annual reports to the Minister for Finance, who will lay them before the Houses of the Oireachtas. These reports are to contain specified statistical information with regard to appeals where this is required by the Minister or by any enactment. The commissioners also will be able to report to the Minister on other matters as they consider appropriate. The Minister may require the commissioners to report on various matters but this is subject to the commissioners not being required to include information on matters that would prejudice the performance of their functions.
Part 3 provides for the treatment of existing appeals when the new appeal process comes into operation. It contains provisions relating to the arrangements for transitioning from the old appeal process to the new model. On the commencement date for the new appeal process, appeals already will have been made and will be at various stages of the old appeal process. Many of the steps in the old appeal process will continue under the new process. The general rule is that existing appeals will move on to the next stage in the process. Thus, for example, appeals that have already been made to Revenue will be transferred to the Appeal Commissioners and the revised case stated procedure for appeals to the High Court will apply to Appeal Commissioners’ determinations made after the commencement date. However, there are exceptions to this general rule, for example, a taxpayer whose appeal has been heard but not determined still will be entitled to a rehearing before a Circuit Court judge, should he or she lose the appeal. There also are provisions to allow a different Appeal Commissioner to finalise an appeal in circumstances where the Appeal Commissioner who started the adjudication is unable to so do for reasons such as retirement.
Part 4 concerns the insertion into the Taxes Consolidation Act 1997 of a new Part 40A, which deals with appeals to the Appeal Commissioners. Part 40A contains provisions relating to the entire appeal process and to the Appeal Commissioner's conduct and management of that process, commencing with the making of appeals and their acceptance or refusal, progressing to adjudication, hearing, determination and publication of determinations and finishing with appeals to the courts against determinations of Appeal Commissioners. It facilitates a more active case management approach by the Appeal Commissioners. In straightforward cases, they will not be required to hold a hearing but can adjudicate and determine the appeal based on paper submissions, subject to the agreement of the taxpayer to this approach. The Appeal Commissioners will be able to dismiss appeals where the taxpayer does not co-operate with them by, for example, providing information such as accounts requested by the commissioners. Responsibility for the preparation of a case stated for an appeal to the High Court, subject to a time limit, is being given to the Appeal Commissioners themselves instead of the parties to the appeal. Increased transparency and certainty will result from the requirement that all Appeal Commissioners' determinations must be published.
Part 40A contains provisions relating to whether a hearing, or part of a hearing, is to be held in public or in private. As I outlined, the default position is that all hearings are to be held in public, subject to exceptions relating to, for example, issues involving public order or sensitive issues. However, the Appeal Commissioners must hold a private hearing or a part-private hearing where an appellant submits a request for this. As I indicated earlier, this represents a change from the original proposed provisions following the views expressed during pre-legislative scrutiny and by many stakeholders.
Part 5 contains amendments to 137 separate sections and Schedules in the Taxes Consolidation Act 1997. A consequence of the changes being made to the appeal process is the need to make a large number of consequential amendments to provisions relating to appeals in the Taxes Consolidation Act 1997 and in various other taxation Acts contained in Schedule 2. While there are a large number of individual amendments, given they are being made with regard to several different types of taxes and affect a wide range of provisions, most of them are of a similar nature. For this reason, each individual amendment is not explained. The most common amendment is that necessitated by the fact that under the reformed system, a taxpayer will be obliged to appeal directly to the Appeal Commissioners and not via Revenue, as currently happens. Various cross-references that no longer are relevant are being removed such as, for example, references to Part 40 of the Taxes Consolidation Act 1997, which is being phased out and replaced with the new Part 40A.
Another type of amendment will clarify and make more explicit a right of appeal that is currently only implicitly stated in the various tax and duty Acts. A valid appeal under the revised appeal process will require a specific right of appeal to be given in the relevant tax and duty Act. The opportunity presented by the reform of the appeal process is being taken to rectify any anomalies and inconsistencies that currently exist and to standardise as far as possible the appeal provisions for the various taxes and duties. One example of such standardisation relates to the number of days allowed for the making of an appeal. While 30 days is the usual time limit, this has not been standard across all of the taxes and duties. Another example is the alignment of the preconditions for the making of an appeal against different types of Revenue assessments such as, for example, the requirement to have submitted outstanding returns to Revenue and to have paid the part of the tax liability not in dispute before an appeal can be made.
The origins of the Appeal Commissioners date back to the Act of Excise 1662 and thus it is a body that predates the foundation of the State. At present, the Minister for Finance appoints Appeal Commissioners pursuant to section 850 of the Taxes Consolidation Act 1997. Effectively, the Minister has had discretion as to who was appointed and on what terms, subject only to laying details of the appointment before the Houses of the Oireachtas. This Bill proposes to change this by requiring that appointments will be made by the Minister only following an open competition run by the Public Appointments Service.
The role of the Appeal Commissioners is to act as an independent administrative tribunal in adjudicating disputes between taxpayers and the Revenue Commissioners. This Bill is designed to enhance the independence of the Appeal Commissioners, increase transparency and provide a more efficient appeal system in tax disputes to the benefit of compliant taxpayers and the Exchequer alike. I commend the Bill to the House.