I move: "That the Bill be now read a Second Time."
The Bill has three Parts, the first of which relates to the Short Title, commencement and definitions sections. The second Part provides amendments to the legislation governing the Tax Appeals Commission, primarily to implement recommendations of an independent review carried out in 2018. The third Part relates to the transposition of the EU prospectus regulations via an amendment to Part 23 of the Companies Act 2014.
On Part 2, I will provide Deputies with some background information on the Tax Appeals Commission, TAC, and the independent review of 2018. The commission was established on 21 March 2016 under the Finance (Tax Appeals) Act 2015 and took over from the Office of the Appeal Commissioners. It was established as an independent body having its own Vote and Accounting Officer with a view to providing increased transparency and an enhanced appeals mechanism for taxpayers. Since its establishment, staffing at the commission has increased from two commissioners and four administrative staff to five commissioners and 22 administrative staff at various grades as of the end of September 2019. However, a number of factors have contributed to the development of a backlog of appeals, including the facts that the commission inherited a substantial number of legacy appeals and that the process for appeals changed on the establishment of the commission, resulting in appeals now being notified to the commission in the first instance rather than to Revenue.
On foot of the growing backlog and requests for significant additional resources, the Minister for Finance, Deputy Donohoe, commissioned an independent review of the workload and operations of the TAC in 2018. The review, which examined the governance structures, workload and operations of the commission, was conducted by Ms Niamh O'Donoghue, a former Secretary General of the Department of Employment Affairs and Social Protection. The resulting report was published on budget day in October 2018. The Minister has expressed his full support for the recommendations and work on implementation is ongoing within the Department and the commission.
There has been a near doubling of the commission's budget to accommodate the recommended staff increases and improvements to computer systems and equipment. Following a competition conducted by the Public Appointments Service, the Minister authorised the appointment of three additional temporary appeal commissioners, two of whom will take up their appointments this month. The recommended additional administrative and technical posts were sanctioned and recruitment by the commission for these posts is nearing completion. There is enhanced regular contact between the commission and the Department on governance matters and corporate supports. An administrative working group meets regularly to address issues arising between the commissioners and Revenue in the administration of appeals.
The Bill will enable the progression of another key recommendation of the review carried out by Ms O'Donoghue, namely, the appointment of a chairperson of the TAC. Amendments to the legislation governing the commission are required to establish the role and responsibilities of the chairperson and thus allow for his or her recruitment. Section 5 provides for the appointment of a chairperson and specifies his or her functions. The Bill provides that the chairperson, who will also be an appeal commissioner, will be responsible for ensuring the efficient operation of the commission and accountable to the Minister for Finance in this regard. It is envisaged that the establishment of a commission chairperson will strengthen the body's governance and accountability while bringing its structure in line with those of similar bodies. This section also provides for the resignation or removal from office of the chairperson.
Section 8 provides that a commissioner's term of appointment shall not exceed 14 years.
Section 11 provides for the allocation of responsibility for the issuing of reports under section 21 of the Finance (Tax Appeals) Act 2015 to the chairperson.
The Bill will also clarify some aspects of the existing appeals legislation to facilitate the appeals process. Section 12 amends provisions relating to appeals against determinations alleged to be erroneous on a point of law. The amendment clarifies that a party dissatisfied with a determination must clearly state the respect in which the determination is alleged to be erroneous on a point of law, in addition to stating dissatisfaction with the determination.
Section 13 provides for amendments to requirements in respect of the presentation of documents for inclusion in a case stated to the High Court. This amendment clarifies the requirements for appellants and commissioners with regard to the case stated process under which an appellant may appeal a decision of the commission to the High Court. It is anticipated that this amendment will increase case management efficiency.
Section 4 will remove any ambiguity as to the ability of the commission to enter into contract, thereby guaranteeing its independence.
The third Part of the legislation will amend Part 23 of the Companies Act 2014 as part of the transposition of the EU prospectus regulations directive. Ireland's prospectus framework is implemented into domestic legislation through statutory instrument and Part 23 of the Companies Act 2014. The Bill provides for amendments to Part 23, which are necessary to complete the transposition into Irish law of EU Regulation No. 2017/1129 of the European Parliament and the Council on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. The regulation entered into force on 21 July 2019 and repealed the 2003 prospectus directive. Although the majority of the regulation is directly effective, certain provisions had to be transposed into Irish law through the European Union (Prospectus) Regulations 2019, contained in Sl 380/2019, which were enacted on 19 July 2019.
The EU regulation harmonises the requirements for the drawing up, approval and distribution of the prospectus that must be published when securities are offered to the public or admitted to trading on a regulated market. It aims to help companies, particularly small and medium enterprises, SMEs, access more diverse sources of finance by simplifying the rules applying to prospectus documents while maintaining appropriate investor protections. The regulation aims to reduce the overall cost and administrative burden for companies that are required to issue a prospectus, while enabling investors to make informed investment decisions on the basis of the information provided being accurate, comprehensible, concise and easy to analyse. It was originally intended that the required changes to Ireland's prospectus framework would be made through a consolidated secondary instrument. However, on the basis of legal advice it was deemed necessary to make some amendments through primary legislation.
The amendments to Part 23 of the Companies Act 2014 provided for in the Bill are mainly technical in nature.
Section 15 updates the relevant legal references to refer to the 2017 EU regulation and its associated delegated Acts, and to update the definition of "local offer" to reflect the increase in threshold to €8 million. The threshold exempting securities offerings from the requirement to issue a prospectus is being increased from the current €5 million limit to €8 million, as provided for in the 2017 EU regulation. Once this change is made, SMEs making securities offerings up to €8 million can submit a local offer filing to the Companies Registration Office instead of having to issue a full prospectus. This allows SMEs to more easily access capital market funding as an alternative to relying on bank financing.
Section 17 transposes the provisions contained in Article 11 of the EU regulation restricting the civil liability of certain persons involved in issue of the prospectus unless the prospectus is deemed to be deliberately misleading, inaccurate or omits key information.
Given the increased local offer threshold, and following consultation with the Central Bank of Ireland, section 21 provides for additional disclosure requirements to be inserted into the local offer regime to improve the investor protections currently in place in section 1361 of the Act. These requirements are related to the filing that must be made with the Companies Registration Office and serve to enhance the protection of investors that wish to participate in local offers.
Section 25 provides for transitional measures from the Prospectus (Directive 2003/71/EC) Regulations 2005 to the European Union (Prospectus) Regulations 2019.
I wish to indicate to the House that the Minister, Deputy Donohoe, may need to bring forward a technical amendment on Committee Stage. The Department is consulting with the Office of the Parliamentary Counsel on this point and I look forward to discussing this important legislation further with the committee.