Introduction
The Tax Appeals Commission (TAC) was established in 2016, replacing the Appeal Commissioners as the body responsible for administering tax appeals across all tax heads. There is no other Irish quasi-judicial body or even a court that deals with such a range of cases, from the sheer volume of Small Claims Court cases to the complexity and quantum of cases in the Commercial Court. On 25 April 2022, the TAC published its 2021 annual report (Report), which includes a wide range of metrics and indicators to demonstrate how the TAC is performing in its role. We set out below some of the key statistics from the Report.
Key Statistics:
- 1,793 appeals closed valued at €3.14bn;
- 1,476 appeals received valued at €275m;
- 130 determinations issued affecting 157 appeals valued at €443m;
- 188 hearings scheduled, 95 of which were remote valued at €1.96bn;
- 732 settlements agreed valued at €2.24bn
- 164 Case Management Conferences (CMCs) scheduled remotely valued at €4.7bn;
- 558 withdrawn by Appellant valued at €441m;
- the TAC was requested to state 22 cases to the High Court, which was down from 28 in 2020;
- 10% drop in appeals on hand from 2,703 to 1,525;
- during 2021, income tax remained the tax most frequently appealed, arising in 51% of appeals received. VAT, VRT, CGT and COVID-19 related tax disputes made up a further 33% of the appeals on hand;
- in 2021, the TAC received 123 appeals which referenced either PAYE, PRSI or USC. The combined total of these accounted for 8% of all appeals received in 2021;
- in the second half of 2016, 2,758 legacy appeals were transferred to the TAC in accordance with Part 40A of the Taxes Consolidation Act 1997 (TCA 1997). Following a detailed initial review of the files, 1,600 of the appeals were grouped with related appeals or with lead-follower appeals. Considering this review, the number of individual appeals reduced from 2,758 to 1,158.
Appeal backlog
When the TAC was established in 2016, all outstanding tax appeals that had been made to the Office of the Appeal Commissioners were transferred to the TAC. As such, when the TAC began hearing cases, it already had a backlog of 1,158 cases. The TAC has made steady progress reducing this caseload and in January 2021, the TAC closed 107 legacy appeals, leaving a balance of 265 appeals outstanding.
The TAC has continued its progress. In 2021, it closed more appeals than it received, receiving 1,476 appeals, and closing 1,793 appeals. This resulted in a 10% drop in appeals on hand to 2,703 appeals and reduced the quantum under appeal from €4 billion in 2018, to €1.65 billion by year end 2021.
It will be interesting to see whether the TAC can continue to reduce the caseload backlog after the anticipated resumption by Revenue of pre-pandemic levels of tax compliance interventions. It was interesting to note from Revenue’s 2020 annual report that due to COVID-19, Revenue audits undertaken in 2020 decreased by more than 50% relative to 2019.
Settlement
Of the 1,793 appeals that the TAC closed in 2021, 40% were closed due to the parties agreeing to settle the appeal. Cases may settle for less than Revenue’s estimate of a taxpayer’s liability where Revenue takes a commercial approach and exercises its judgement having weighed up the risks, time, costs and expenses involved in litigating the issues. In such cases, it is recommended that taxpayers should seek litigation advice to assist with the settlement process.
Increasing the TAC’s resources
The annual budget allocated to the TAC has increased significantly over recent years. In 2017, 2018, 2019, 2020 and 2021 the TAC provisionally received funding of €1.605m, €1.626m, €3.208m, €3.233m and €3.218m, respectively. The annual increases in resources goes some way to explaining the TAC ‘s impressive response to the physical restrictions imposed due to COVID-19. In 2021, 95 hearings and 164 case management conferences were heard remotely. In addition, TAC staffing resources have significantly increased and now comprise one chairperson, 2 fulltime appeal commissioners, 6 temporary appeal commissioner and 22 administrative staff to support the appeal commissioners in their work.
Case stated procedure
During 2021, the TAC suggested legislative amendments to increase the timeframe for completion of the ‘case stated’ process. As a result, the Finance Act 2021 amended Section 949AQ TCA 1997 to increase the length of time required for the TAC to issue the signed case stated to the parties. Section 949AQ(3)(a) TCA 1997 now states that the TAC must issue a draft case stated to the parties within 3 months from the date of the application. The overall effect of the changes to the case stated process is a total increase of 42 days to the time frame for completion of the process. This should decrease the pressure on the TAC to discharge its function in this area. In 2021, the TAC stated 22 cases to the High Court, which was down from 28 cases in 2020.
A link to the Report can be found here.
Contributed by Robert Kearns
