Following a commitment made by the Minister for Finance in last year’s budget to review the tax appeals process in Ireland and a pre-legislative scrutiny process the Finance (Tax Appeal) Bill 2015 (the “Bill”) was published on 17 July 2015. The Bill completely overhauls the tax appeals process in Ireland. Not only will practitioners and taxpayers have to familiarise themselves with the new tax appeals process they will also have to understand how the proposals that deal with the transition from the old appeals process to the new appeals process impact any existing tax litigation. Taxand Ireland provides a detailed summary of the proposals.
In January 2015 Brian Duffy a Tax Partner with William Fry, Taxand Ireland participated in the pre-legislative scrutiny of the draft heads of the Finance (Tax Appeals Commission) Bill (the “Draft Heads”). This was the first time a tax practitioner was invited to the process and he gave evidence before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform on the Draft Heads.
The Bill was published on 17 July 2015 and aims to reform the functions and structure of the Office of Appeal Commissioners which is responsible for the hearing of appeals by taxpayers against decisions of Revenue. The Bill completely overhauls the tax appeals process in Ireland and provides for the establishment of a new body called the “Tax Appeals Commission” (referred to in the Bill as the Commission). This new body will, in due course, replace the Office of the Appeal Commissioners, however, each member of the Commission will still be known as an Appeal Commissioner or Commissioner. Some of the measures being introduced are new but others merely put on a statutory footing what was already the practice and procedure in the area.
The main areas of note include:
Tax Appeal Hearings may be held in public or private
Under the current tax appeals process hearings before the Appeal Commissioners are held in private in order to protect the privacy of the taxpayer. The Draft Heads provided for tax appeals to be heard in public subject to extremely limited exceptions on grounds of public interest and security. Mr Duffy submitted that the introduction of the public hearing of tax appeal cases would constitute a serious impediment to taxpayers appealing a tax matter on the basis that in a very small jurisdiction such as Ireland individuals and corporates wish to maintain privacy over their tax affairs and finances.
Although the default position in the Bill is that all hearings before the Commission will be held in public importantly the Bill permits the taxpayer to request a hearing (or aspects of it) to be held in private. This is positive for taxpayers wishing to keep personal and commercially sensitive information private. Tax appeals involving overriding issues of public order, national security, sensitive information, protection of a person’s right to respect for his or her private or family life and the interests of justice will automatically be held in private.
Publication of decisions
Appeal Commissioners are not currently obliged to publish their decisions. The Bill requires publication of the determinations of the Commission on the internet within 90 days of notification of the determination. It also permits the Commissioner to provide copies of previous determinations (redacted) that dealt with “common or related issues” and (where the parties do not object) determine the appeal without a hearing. Determination of hearings that were held in private will be published in such a way that the identity of the taxpayer will not be disclosed. The publication of decisions is positive for taxpayers and should speed up the appeals process and also help taxpayers make an informed decision before embarking in tax litigation.
Appeal to Circuit Court abolished
Under the existing tax appeal process a taxpayer who is aggrieved by the determination of an Appeal Commissioner can appeal to the Circuit Court for a full rehearing of the case, or to the High Court by way of case stated on a point of law. The Draft Heads proposed the removal of the right of appeal to the Circuit Court and Mr Duffy made representations that it should be retained. Unfortunately the Bill only permits an appeal from the determination of the Commissioner by way of case stated on a point of law to the High Court (and then after that to the Court of Appeal). This is disappointing in that it removes a fundamental safeguard to the taxpayer. An appeal by way of case stated is a very specific form of legal appeal, based solely on a point of law. The grounds of appeal are to be restricted to situations where the party considers that the Commissioner erred in making his/her determination concerning a point of law and not in relation to the facts.
The responsibility for drafting the case stated is with the Commissioner (who cannot delegate this function but may have “regard to” the representations of the parties on the content of the draft case stated). Therefore, the taxpayer has no general right of appeal against the decision of the Commission which is unusual in the context of judicial or quasi-judicial proceedings. The costs associated with mounting High Court proceedings will have to be taken into account by a taxpayer in deciding whether to appeal a determination of a Commissioner.
It is likely that the Bill will be signed into law towards the end of this year.