The new statutory process of resolving disputes between taxpayers and the Revenue Commissioners, as embodied within the provisions of the Finance (Tax Appeals) Act 2015, commenced on 21^st March 2016. The new act not only endorses the statutory independence of the Tax Appeals Commission but also makes provision for the following significant changes:

1. an appeal to an assessment is now made directly to the Appeals Commissioners;
2. a requirement to clearly articulate the matter under appeal;
3. a requirement to file skeleton type argument;
4. proceedings to be held in public unless an election is made for an “in camera” or private hearing;
5. holding of a case management conference to expedite the process or if possible to resolve the dispute;
6. publication of decisions with identification details redacted, and
7. removal of the right of appeal to the Circuit Court.

Initiation of an appeal

Historically, an appeal against an assessment or adverse determination was made directly to the Revenue Commissioners. The resulting delays in preparing the initial appeal document, Form AH1, invariably elongated the period prior to hearing. To circumvent such delays, the new process now requires the taxpayer to appeal the assessment or determination to the Appeals Commissioners within 30 days from the date of the assessment or determination using the new ‘Notice of Appeal’ document as prescribed by the Tax Appeal Commission. That form provides the Appeal Commissioner with the grounding information with reference to the disclosure of the following information:

1. the name and address of the Appellant and, where relevant, the corresponding details of the person acting under the Appellant’s authority in relation to the appeal;
2. the PPS number or tax reference number, as appropriate, of the Appellant;
3. the appealable matter in respect of which the appeal is being made;
4. the grounds for the appeal, in sufficient detail for the Appeal Commissioners to be able to understand those grounds;
5. confirmation that any statutory preconditions to the bringing of an appeal have been satisfied;
6. a copy of the notification from the Revenue Commissioners in respect of the matters the subject of the appeal; and,
7. if the appeal is a late appeal, the reason why the Appellant was prevented from making the appeal within the time allowed by statute.

Clear Grounds of Appeal

The grounds of appeal must be clearly described as a taxpayer will not be entitled to rely, during the proceedings, on any ground of appeal that is not specified in the notice of appeal unless the Appeal Commissioners are satisfied that the ground could not reasonably have been stated in the notice.

Skeleton Argument

While in the early stages of evolution, it is envisaged that within 6 weeks after lodging the appeal, the taxpayer will be required to prepare a “Statement of Case” or skeleton type argument comprising the following:

1. An outline of the relevant facts;
2. A list of, and copies of, any written documents upon which the party intends to rely or which the party intends to produce in the proceedings;
3. Brief details of any witness who may be called upon by the party to give evidence in the proceedings;
4. Details of the statutory provisions to be relied upon;
5. Details of the case-law that will be relied upon;
6. Whether the party assents to documents being furnished and notices given by e-mail or other electronic means;
7. Whether the party assents to the appeal being determined without a hearing;
8. The party’s estimate of the likely duration of a hearing;
9. The expressed intention to have the proceedings heard in camera

In the interests of the Constitutional right to a fair hearing, it is assumed that the Revenue Commissioners will also file a corresponding reply and furnish a copy to the taxpayer.

Case Management Conference

Further procedures have been enacted to facilitate the expeditious resolution of the tax dispute. The statutory prescribed “case management conference” contemplates the early intervention of the Appeal Commissioner to review the proceedings to date and to seek clarification of outstanding issues. Furthermore this process envisages the resolution of the appeal without the requirement to hold a hearing. Therefore such a process offers an expeditious and cost effective way of resolving the dispute and could possibly entail a process of negotiation and mediation.

The Appeal Commissioners may hold such further case management conferences as appear to them necessary or desirable with the aim of securing the completion of the proceedings in a fair and expeditious manner.

Publication of Decisions

The legal maxim developed in R v Sussex Justices, Ex parte McCarthy ([1924] 1 KB 256, [1923] All ER Rep 233) established the principle that “Not only must Justice be done; it must also be seen to be done.”

A major criticism of the old system was the lack of precedent cases in the public domain. This often led to resentment as it was considered that the Revenue Commissioners were better equipped to deal with issues of law that had been previously determined by the Appeal Commissioners.

Fortunately this procedural inequality has been corrected with the statutory obligation to publish decisions and is a welcome step that not only enhances the tribunal’s objectivity and independence but also serves to provide valuable insights in relation to similar fact cases. Furthermore the publication of decisions also serves to reassure the public that decisions are based on a detailed consideration of the facts and a sound interpretation of the law.

Finally, the publication of decisions will also provide invaluable assistance to practitioners in advising clients about the merits of taking an appeal specifically in context of similar fact issues resulting in considerable cost savings for taxpayers and indeed the Exchequer.

Circuit Court

The tax appeals tribunal is a unique institution and different to many other statutory tribunals to the extent that there was a right of appeal to the Circuit Court where the matter is heard de novo. A further distinction between the tax appeals tribunal and other tribunals is that the burden of proof is on taxpayers to disprove an assessment or determination made against them. In some cases this involves a requirement to prove a negative.

Notwithstanding the intense lobbying of the professional bodies, a position supported by the Public Accounts Committee, the right of appeal to the Circuit Court has now been removed. Therefore the requirement to clearly articulate the facts at the appeal hearing stage is now crucially important as there will be no opportunity to introduce new facts, regardless of their strategic importance, in a case stated to the High Court.

Tax Dispute Resolution

As mentioned above, a feature of the new provisions is the requirement to file a skeleton type argument outlining the facts, relevant statutory provisions, case law, appropriate documents and evidence that will be adduced at the hearing. In accordance with the Constitutional right to fair procedures, Revenue should also be required to file a reply before the matter is set down for hearing. While this process will expedite efficiencies in the system, there will be a greater requirement for taxpayers, their agents and Revenue to be properly prepared.

UK Experience

The new appeals process therefore leads to an opportunity to resolve the tax dispute without going to hearing. In the UK, a process of tax dispute resolution is proving to be very efficient in finalising outstanding tax disputes between revenue authorities and taxpayers. It involves working collaboratively with Revenue to resolve a dispute and entails:

1. a joint participation by the parties
2. an undertaking by taxpayers to provide a full disclosure of the facts (good & bad)
3. an understanding of the relevant legislation, and
4. the provision of case law which is beneficial and prejudicial to the taxpayer’s case requiring the taxpayer to apply the cases that endorse his or her arguments and distinguishing those cases which are less favourable.

Benefits

The experience from the UK is that a joint collaborative approach with revenue authorities based on competence, trust and integrity provides benefits both for the taxpayer and the revenue authorities. For the taxpayer, the benefits of an efficient tax dispute resolution process are:

1. resolves the issue quickly
2. reduces costs
3. reduces stress
4. ability to move on with certainty, and
5. enhanced working relationship with Revenue

Correspondingly for Revenue, the benefits are:

1. clears significant backlog
2. much of the work is done by taxpayer
3. develops a workable system
4. better allocation of resources
5. immediate funds for the Exchequer
6. promotes better relationships with advisor and taxpayer, and
7. enhances reputation domestically and internationally

At a recent tax seminar on Tax Dispute Resolution, a representative from the Revenue confirmed that “Revenue is very willing to engage with practitioners who present a full case file.”

As such, the tax dispute resolution process requires clear instructions from a client and provision of a detailed case file to be presented to the Revenue Commissioners. The next step involves a meeting where both parties outline their concerns and the issues that are impeding the satisfactory resolution of the matter. During the process of negotiation, the parties must listen carefully to the other parties’ concerns to enable a meaning conclusion to be reached. Sometimes a clarification of facts is required or reliance of contemporaneous case law that has dealt with a similar issue can resolve the dispute without any requirement to pay additional tax. If, as in a certain number of tax disputes, the interpretation of the law is not certain, a settlement can be reached based on the likelihood of a successful outcome of a full hearing of the dispute before the Appeal Commissioners.

Failure of the parties to agree the issue, the matter can progress to a case management conference which is a facility arranged by the Appeal Commissioner where attempts can be made to resolve the dispute without going to full hearing.

Way Forward

Tax dispute resolution can work as a method to settle matters prior to hearing however it cannot be a one-way street. It is therefore important that tax practitioners who represent taxpayers are adequately prepared in relation to facts, law and relevant authorities to support their client’s position. There must also be a mutual obligation to transparency and co-operation which will form the basis for on ongoing relation based on integrity & trust. If the desire to resolve the matter exists, there is no doubt that the UK experience in tax dispute resolution can be replicated in this jurisdiction.

Conor Kennedy, BL, heads up the PwC Tax Dispute Resolution group and is a former member of the Law Library where he worked as a barrister specialising exclusively in tax law. He has represented clients through all stages of the tax litigation process from the Appeal Commissioners to the Supreme Court. His experience includes resolving disagreements with Revenue by holistically focusing on all aspects of law.

Email: conor.y.kennedy@ie.pwc.com