Revenue appeals process
A significant change was implemented earlier this year with respect to the appeals process available to tax payers where they disagree with any assessment raised by Revenue. The Finance (Tax Appeals) Act 2015 commenced in March 2016. It introduced new measures and processes for tax appeals. It also further enhanced certain old processes that are to be retained. This article is intended to draw focus to some of the more notable changes in legislation and to highlight the continuing need for proactive interaction with tax and legal advisers in ensuring an opportunity to challenge tax assessments is not missed.
New appeals body
As part of the changes, a new body the Tax Appeals Commission (TAC) was created. This body was established with a view to strengthening the independence of the appeals process and to remove the potential for biased adjudications as a result of the involvement of Revenue in the appeals process. The TAC has published the rules of the organisation and same are to be reviewed on an ongoing basis. It is intended the TAC will facilitate appeal proceedings which are independent, fair and overall accessible. The overriding intention in establishing the TAC is to process and determine appeals as efficiently as possible without the formality of a court setting.
The time allowed for making an appeal has been standardised at 30 days after the notification of the assessment and it is possible to submit the notice of appeal online through the website www.taxappeals.ie. On the initial notice of appeal, a significant amount of information is required to be included and with only 30 days to decide whether or not to appeal, gather the information and submit the appeal, time is of the essence.
The notice must include the grounds of appeal, the relevant legislation, and the supporting case law. Failure to identify a ground of appeal at this stage could limit the scope of the appeal at hearing. While there is an option to apply to include an additional ground of appeal at a later stage, it must be shown that it could not reasonably have been stated in the notice at the time it was submitted.
Once an appeal has been accepted, the TAC direct the preparation of a statement of case by the taxpayer and may also request one from Revenue. This statement should set out the facts, list of documents to be relied on, details of any witnesses, statutory provisions to be relied on, details of any relevant case law and an estimation of the duration of the appeal.
The commissioners of the TAC have sole discretion for accepting or refusing any application for appeal. In the event an application is refused the only option available to an aggrieved tax payer is to judicially review the decision of the commissioner in the High Court. This represents a marked change from previous procedures where it fell to Revenue to determine whether or not an appeal was valid.
Thereafter, the TAC request the preparation and exchange of legal submissions by both the tax payer and Revenue. This is usually directed to be prepared sequentially with the taxpayer providing their submissions first and Revenue responding to the arguments within their own submissions. Prior to the main hearing, there will be a preliminary hearing or case management conference in order to net the issues to be heard and deal with any preliminary applications.
Once the TAC has heard the appeal it must issue a determination within 90 days of its decision. The legislation now calls for all determinations of the TAC to be anonymised and made available on their website. Several determinations have now been published online and vary from personal tax matters such as the applicability of income tax and succession planning reliefs to VAT obligations. The publication of these determinations going forward will bring improved certainty to the interpretation of the law for practitioners and tax payers alike.
A further development is that by default, TAC cases are to be heard in public, however there is an option for a case to be held in private. There is also no longer a need to physically attend for testimony and a case can be presented to the TAC both orally and in writing.
There is also scope under the new legislation for Revenue to give evidence in support of increasing the scope of their assessment.
Previously, a tax payer had recourse to a rehearing in the Circuit Court in the event of an unfavourable decision. Under the new legislation, there is no longer a right of rehearing available to tax payers and thus, in the event of seeking a further appeal, the only option now is for a tax payer to bring a costly High Court challenge on a point of law. This significantly reduces the scope for tax payers to engage in the legal system as a means of defending their position. Further, there are few who would be in a financial position to bring a High Court challenge unless out of absolute necessity.
Point of law challenge
The procedure for bringing a challenge has also been amended and now a case stated for the opinion of the High Court must be prepared by the commissioners of the TAC. Further, it must be prepared in conjunction with the parties to the appeal, and any such appeal must be brought within 3 months of determination. While the taxpayer has an opportunity during this process to put forward responses to the draft case stated as prepared by the TAC they have no avenue to appeal what is included in the case stated to the High Court.
It is our view that while the new procedures may attempt to introduce enhanced efficiency and independence of process, there is an argument that the tax payer is being denied any real access to justice in circumstances where a decision of the TAC may not be fair, just or well assessed.
In the absence of recourse to the Circuit Court, there is the potential for erroneous decisions of the TAC to go unchallenged. It is not feasible for the majority of tax payers to bring a High Court judicial review or challenge in circumstances where they feel they are aggrieved; and it is arguable that in the vast majority of cases, most tax payers will de disinclined to pursue a matter any further for fear of being unsuccessful. Thus, we would highlight the need for proactive consultation with your tax advisors where an appeal is being considered. It is vital going forward that the strongest possible case be made to the TAC in order to eliminate the potential for future costly litigation.