Over seventy million more reasons to look again at the Appeal Commissioners

Tom Maguire

Last Friday I, along with over 900 tax consultants, attended the Tax Institute’s annual black tie dinner.  Think IFTA night for tax advisers but without Gabriel Byrne’s lifetime achievement gong.  One of the most talked about topics that evening was the Appeal Commissioners.  I know what you’re thinking:  Tom, you’re going to a black tie bash and you’re talking about tax disputes; it’s what we do.      

The Appeal Commissioners get involved when the taxpayer and Revenue can’t agree over the amount of tax due and the taxpayer effectively says “see you in court” to Revenue when it receives their tax assessment.  I wrote about this issue in my column last December asking who owned the €1.5 billion which was then being contested before the Appeal Commissioners.  That figure came from a Dail question asked of the Minister for Finance before last year’s budget. 

Now within just a few months that figure has increased by over €70 million to €1.6 billion according to another Dail question a couple of weeks ago. To put that in perspective the amount of that increase isn’t a million miles away from the full year cost of reducing the Universal Social Charge (USC) rate of 2.5% to 2% in last year’s budget.   

In that pre-budget Dail question the amount then owing of €1,534,030,537 was spread over 4,387 cases (the level of specificity is admirable).  The Minister noted as part of his February response that the Tax Appeals Commission (TAC) advised him that “…as of 30 January, it currently has approximately 3,648 appeals under its remit” and the amount in dispute was €1,608,980,923.

So things have moved on since that pre-budget question and my column because almost 50 cases were heard (half of them are awaiting determination although some may have related to cases involving many appellants) in 2017.   In addition the Minister noted that last year the TAC held 89 Case Management Conferences (CMCs) relating to 575 appeals. A CMC is an informal hearing where parties to the appeal attend with a view to reaching agreement without the need for a formal hearing. According to the Minister as a result of these CMCs, 38 appeals were closed, 33 were withdrawn or settled and approximately 350 are currently being adjudicated on without the need for a hearing.     

So between hearings and CMCs there was a number of sit downs with the Appeal Commissioners last year to try work out who owns the debated billion plus amount; be it the taxpayer or Revenue.  Those sit downs could last somewhere between hours and days depending on the complexity of the issue and when you factor that in then you can see that these guys have been busy but the workload remains.  

The Minister noted that the Appeal Commissioners are also “planning to move to new premises in 2018. This should facilitate the conduct of multiple hearings of all natures, occurring parallel, and should significantly increase the number of determinations and settled appeals, in 2018”.  That’s great news for the Commissioners but it’s clear that they still need additional suitably qualified Commissioners on their bench.   

Take an example.  The Minister said that since the appointment of the TAC in 2015, adjudication has commenced or been completed, with or without a hearing, in respect of 158 appeals. Determinations have issued in respect of 82 of those appeals and on average it took 213 days between the hearing and the determination. He went on that of the 76 remaining cases for which a determination is outstanding they have been waiting on average 319 days so far however some determinations may relate to a number of taxpayers.  Further, 251 appeals were received in January of this year alone and only one has been closed.

A backlog of cases is one thing but isn’t stopping the postman constantly pushing more appeals through TAC’s letterbox.  Why?  Tax isn’t always clear and someone has to make a call on the tax, if any, due.      

You have to remember that a lot of deliberation, discussion and reflection will have occurred between the taxpayer and Revenue before that “see you in court” moment.  Taking an appeal requires significant consideration on the taxpayer’s part because this can be a long process resulting in potentially significant costs.  Therefore such time delays all add to the stress of the process coupled with the fact that engagement may continue between Revenue and taxpayer right up to the steps of the Appeal Commissioner in order to try to arrive at some settlement.  Maybe the TAC’s new building won’t have steps!

The suggestion of additional forms of arbitration was made late last year as part of another Dail question and the Minister’s response was that it wasn’t appropriate in the context of complex tax disputes and the matter may create a precedent with significant implications for the Exchequer.  Given the amounts at stake and given that the aged profile of almost €1 billion out of the disputed €1.6 billion is between 2 and 10 years then maybe it’s time to look again at this suggestion.

I mentioned in my previous column that a form of small claims appeal court could alleviate matters given the then significant number of appeals involving disputed tax below €10,000. That's not to say that such a court could be a form of TAC-lite because interest may be clocking on these amounts while they remain outstanding and would become payable by the taxpayers concerned if the decision went against them.  Perhaps this is something else that could be considered. 

Let’s be clear that what isn’t clear right now is who owns €1.6 billion in tax.  That’s a lot of cash that could be put to good use by the taxpayer or the Exchequer depending on how the Commissioners decide.  Given the current timeline of such decisions then isn’t it time to help those decision makers as much as is possible?  Isn’t it time to decide on how to decide?


Tom Maguire is a tax partner with Deloitte and his fortnightly columns on tax matters appear in the Sunday Independent. The above article was first published on 4th March, 2018.


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