I propose to take Questions Nos. 275 and 276 together.
As Deputy Barry is aware, my Department has carried out a public consultation on the reform of the tax appeals system with the objective of improving the administration of the system and to provide enhanced arrangements for an independent, efficient, well-defined, clear and transparent system for appeals relating to decisions of Revenue, while delivering value for money and increased certainty for both taxpayers and the State. Submissions advocating reform were received in the main from representative bodies, from some tax practitioners as well as from Revenue. Following Government approval for the drafting of the Finance (Tax Appeals Commission) Bill, the draft Heads of Bill were sent to the Committee on Finance, Public Expenditure and Reform in December 2014 for pre-legislative scrutiny. As part of this pre-legislative scrutiny, the Committee, of which the Deputy is a member, on 27 January 2015 heard from officials from my Department and from the Office of the Revenue Commissioners and also from representatives of the Consultancy Committee of Accountancy Bodies Ireland, the Irish Tax Institute and William Fry-Tax Ireland. In a subsequent session on 25 February 2015, the Committee heard from Mr. O'Callaghan, one of the Appeal Commissioners. My Department and Revenue have since provided the Committee with further briefing material. Both sessions produced a wide-ranging and interesting discussion and highlighted some important policy considerations for my Department. I look forward to receiving the Committee's report in due course.
Pending the receipt of the Committee's report, the Office of the Attorney-General has been proceeding with the drafting of the Finance (Tax Appeals Commission) Bill and this work is at an advanced stage. I am conscious that reform of the tax appeals system has been advocated by the various stakeholders for a long number of years and, now that it is finally underway, I am anxious to proceed with the publication of the Bill as quickly as possible and, following publication, to have it debated by the Oireachtas.
Revenue has provided information in relation to the number of cases that are currently under appeal with them and an explanation for the source of this information. When an appeal is received from a taxpayer who has an actual outstanding tax liability showing on Revenue's main IT system, it is necessary to suspend the collection and enforcement process pending the finalisation of the appeal. This suspension of collection is indicated by the presence of an appeal marker (called a 'stop 16') that is input to the IT system by the Revenue officer responsible for the particular case. Revenue has an automated reporting system that it uses to identify current 'live' appeals and that operates by extracting all of the cases containing an appeal stop 16 from its main IT system. For this reason, the information that can be obtained is captured at a particular point in time and is not retrospective or cumulative. It is constantly changing, according as appeals are decided either by determination by the Appeal Commissioners or the Courts or by agreement with Revenue, and as new appeals are received.
The numbers given below relate to 27 March 2015. There are currently no 'live' appeals relating to the years 1995, 1997, 1998, 2000 and 2003.
Number of taxpayers at 27 March 2015 -
- who have appealed to Revenue,
- whose appeals have not yet been referred to the Appeal Commissioners to arrange a hearing, and
- who appear on Revenue's IT system as having an outstanding tax liability in relation to which collection has been suspended.
|
Year
|
Taxpayers*
|
|
1996
|
1
|
|
1999
|
1
|
|
2001
|
1
|
|
2002
|
3
|
|
2004
|
2
|
|
2005
|
77
|
|
2006
|
17
|
|
2007
|
21
|
|
2008
|
5
|
|
2009
|
300
|
|
2010
|
236
|
|
2011
|
84
|
|
2012
|
104
|
|
2013
|
161
|
|
2014
|
358
|
|
2015
|
157
|
|
Total
|
1528
|
* Figures are provided in relation to the number of individual taxpayer appellants. However, it should be noted that a single taxpayer may have more than one 'live' appeal. For example, a person may have multiple appeals involving the same issue for several two-monthly VAT periods, but these appeals would effectively be treated as a single appeal. It is felt that in general the number of taxpayers is a more representative and meaningful figure than the number of appeals.
In general, the reason for the delay in progressing the older appeals is that these appeals are being held at the Revenue stage of the appeal process until such time as a test case involving the same disputed issue is determined by the Appeal Commissioners or by the Courts.
Revenue estimates that there are currently about 800 other 'live' appeals that are not captured on its main IT system because there is no outstanding tax liability and thus no need to suspend collection and enforcement action. For example, there are taxpayers who have appealed against Revenue's refusal to allow a repayment, against a Revenue determination that a transaction is a tax avoidance transaction or against a Revenue decision about a taxpayer's country of residence for tax purposes. Revenue is carrying out an exercise to get the latest information in relation to these cases and expects to have this exercise completed by early April.
I have been informed by Revenue that appeals are managed on a case by case basis in individual Revenue tax districts. It has not been the practice to date to keep centralised records in relation to the average time taken for an appeal to either be settled by agreement with the taxpayer (without referral to the Appeal Commissioners) or to be referred to the Appeal Commissioners to arrange a hearing.
Revenue's view is that there is no standard or average time during which it would be expected that an appeal might be processed. The primary focus of Revenue officers is to try to settle appeals by agreement with taxpayers and a substantial majority of appeals settled in this way without ever reaching the stage of a formal appeal hearing by the Appeal Commissioners. The length of time it takes to reach such agreement (or, indeed, to decide that agreement is not possible) varies widely depending on such factors as the nature or the complexity of the matter being appealed and the difficulty in obtaining the appropriate information to establish the correct tax liability. For example-
- an appeal about the quantification of the profits earned by a taxpayer who did not keep proper books and records may involve an extended period of negotiation;
- a disagreement about the interpretation of a point of tax law may be referred to the Appeal Commissioners within a relatively short period of time;
- a number of appellants participating in a disputed tax avoidance scheme may be held at the Revenue stage of the appeal process to await the outcome of a test case appeal before the Appeal Commissioners (and possibly the Courts) before deciding whether to proceed with their own individual appeals.
As the Deputy is probably aware, my intention is that appeals under the reformed system will be made directly to the Appeal Commissioners and not via Revenue as currently happens. Decisions about whether it is appropriate to have a formal appeal hearing to determine a disputed issue and the timing of such hearings will be made by the Appeal Commissioners. The reason for this measure is to ensure that the Appeal Commissioners act independently of Revenue in the performance of their duties and that they are seen to be independent. Under the reformed system, Revenue will still be able to settle appeals by agreement with taxpayers but the key difference is that this process, and the timeframe within which it happens, will ultimately be managed and controlled by the Appeal Commissioners and not by Revenue.
