Commencing disputesi Initiating tax disputes
Tax disputes could arise from civil law matters or criminal matters. The vast majority of tax disputes relate to civil law matters.
Tax disputes usually start by way of an appeal by the taxpayer against a notice of assessment raised by the Revenue. A welcome change introduced by the new tax appeals process is that a taxpayer who wishes to make an appeal against an assessment raised by the Revenue now does so in writing directly to the TAC and not in the first instance to the Revenue. However, taxpayers are entitled to avail of an internal review facility with the Revenue prior to pursuing an appeal before the TAC. If the taxpayer is not satisfied with the outcome of the internal review, that taxpayer may pursue an appeal to the TAC.
Tax disputes may also arise where a settlement cannot be reached during the course of a Revenue audit. If, during the course of a Revenue audit, the Revenue and the taxpayer cannot reach a settlement and there is a technical dispute, an application can be made to have this referred to the TAC. In a Revenue audit situation, an application for an internal or external review can also be made by the taxpayer if the Revenue issues a notice of opinion in relation to a penalty being imposed and the taxpayer disagrees with the opinion.
In the case of an appeal against a notice of assessment, the taxpayer must make written notice of the appeal within 30 days of the date of the notice of assessment.ii Time limits
In situations where a taxpayer does not file a return (or makes one with which an inspector of taxes is not satisfied), the inspector may make an assessment that in his or her judgement ought to be made. As a general rule, an assessment in respect of a chargeable period cannot be made more than four years after the end of the accounting period in which the tax return in respect of such chargeable period was filed. In respect of the chargeable period prior to 1 January 2013, no time limit applies where the Revenue has reasonable grounds to believe that a tax return made is insufficient owing to fraud or neglect or in cases of tax avoidance transactions. The current law is that no time limit applies in respect of chargeable periods from 1 January 2013, where:
- a taxpayer fails to file a return for a chargeable period;
- the Revenue is not satisfied with the sufficiency of the return;
- the Revenue has reasonable grounds to believe any form of neglect (as defined) or fraud has been committed by or on behalf of the taxpayer; or
- the Revenue is of the opinion that the taxpayer has been involved in a tax avoidance transaction within the meaning of Section 811 or Section 811C of the TCA 1997.
There is no statutory requirement on a taxpayer to disclose any particular information in the course of an appeal to the TAC. However, the TAC can require that the taxpayer and the Revenue submit a written 'statement of case', which would typically contain an outline of the relevant facts, a list and copies of the relevant documents that will be relied upon, details of any witnesses, details of statutory provisions being relied upon and any case law being relied upon. The burden of proof is on the taxpayer (except in cases where the Revenue attempts to raise an assessment outside the statutory time limit of four years). Therefore, it is in the interest of the taxpayer to provide as much evidence as possible in support of the appeal. In addition, the TCA 1997 provides the Revenue with significant powers to request the production of information, books and records from a taxpayer. The Revenue also has the power to call for the production of information in relation to a taxpayer's liability from third parties such as financial institutions.iv Revenue rulings
There is no practice for the Revenue to provide binding tax rulings. While it is possible to apply to the Revenue for guidance or opinion in relation to certain matters, such opinions are not legally binding. Queries of a technical nature are dealt with by the Revenue's technical service to provide clarity for taxpayers on complex technical issues. Certain Revenue opinions are subject to the exchange of information requirements in respect of tax rulings set out in the Council Directive (EU) 2015/2376 (the EU Directive) and the OECD framework. The EU Directive was implemented in Ireland by the Administrative Cooperation in the Field of Taxation Regulations 2016. It is not confined to intra-EU situations, applies to relevant opinions issued on or after 1 January 2017, and also has a look-back measure whereby information in relation to opinions issued, amended or reviewed since 2014 (regardless of their period of validity), and rulings issued in 2012 and 2013 (that were still valid on 1 January 2014), were to be exchanged. The OECD framework is also in effect, and applies to certain opinions issued on or after 1 April 2016. Similar to the EU Directive, there is a look-back provision whereby relevant opinions issued or modified in the tax years 2010 to 2013 (and in effect on 1 January 2014) and all relevant opinions issued or modified between 1 January 2014 and 31 March 2016 were to be exchanged. Unlike the EU Directive, under the OECD framework relevant opinions must be exchanged only with certain countries.v Avoiding disputes
There are a number of ways in which a taxpayer can reduce the risk of a tax dispute. Ireland's tax regime is one of self-assessment but there are mechanisms for the taxpayer to rectify errors identified after the tax returns are filed. A 'self-correction' facility permits taxpayers to regularise their tax affairs without incurring a penalty where they detect certain minor errors. This facility has limited application but the voluntary 'qualifying disclosure' regime is more widely available and allows a taxpayer to make a 'prompted qualifying disclosure' or an 'unprompted qualifying disclosure'. The disclosure must be made in writing and be accompanied by payment of tax and interest, but not penalties. To be a 'qualifying' disclosure, the taxpayer must provide complete information and full particulars of all matters giving rise to a tax liability under each tax head. By making a qualifying disclosure in relation to matters giving rise to a tax liability, a taxpayer can avoid prosecution and publication on the periodic list of tax defaulters. A further benefit of making a qualifying disclosure is that the penalties may be mitigated. The level of penalty depends on whether the disclosure was 'unprompted' or 'prompted' (e.g., after notification of a Revenue audit), the category of default (e.g., deliberate behaviour or carelessness) and whether the taxpayer cooperates with the Revenue. There is also a separate disclosure regime for Ireland's general anti-avoidance provision, which in practice has been used only in very isolated and rare occasions.vi Freedom of information requests
The Freedom of Information Act can be a useful tool for taxpayers as it allows individuals to request access to records, amendments of records or reasons for a decision of a public body, including the Revenue, in respect of information created after 21 April 1998 subject to certain exemptions.