The Irish Tax Appeals Commission (TAC) has recently published its 2021 Annual Report providing an insight into the activities and trends in its area of responsibility. The TAC is the first appellate level forum in Ireland for appeals against Irish tax assessments. Highlighted below are some of the key points arising from the report and our take on associated trends.
1,793 appeals closed in 2021 with 2,703 appeals remaining open, with an average of 123 new appeals being lodged per month. 1,476 appeals were received in 2021.
Total appeals on hand reduced by 10% from 2020. This indicates steady progress, particularly in relation to legacy appeals (reduced from 372 to 265) and pre-establishment appeals (reduced from 73 to 48).
2,703 cases on hand at year-end are of a value of €1.658bn of which €275m relates to 2021 appeals. Appeals closed in 2021 amount to €3.146bn.
188 cases were scheduled for hearing in 2021, with 95 held remotely, with around 15% settling prior to hearing and around 3% settling post-hearing. 130 TAC Determinations were issued, determining 157 appeals, valued at €443m.
732 settlements were agreed in 2021, valued at €2.247bn.
During 2021, the Commissioners signed 22 cases stated pursuant to section 949AQ TCA 1997 to enable determinations to be appealed to the High Court (down from 28 in 2020).
Introduced in 2016 and replacing the Office of the Appeal Commissioners, the TAC is responsible for administering tax appeals across all tax heads ranging in complexity and quantum, and is one option open to a taxpayer disagreeing with a Revenue decision or assessment.
On its inception, the TAC took on a significant number of legacy appeals (appeals made directly to Revenue prior to establishment of the TAC, of which there were 1,157 at 2016) and pre-establishment appeals (appeals made to the Office of the Appeal Commissioners, of which there were 289 in 2016). The TAC has made steady progress through this caseload: reducing in 2021 from 372 to 265 and 73 to 48, respectively. This progress is impressive when one also considers the 1,476 new appeals filed in 2021, which was a marked increase on the 1,039 appeals received in 2020.
We note a total of 2,703 cases on-hand at the end of 2021, which is significant, though we also note that this backlog has decreased by approximately 10% year-on-year. The need to increase personnel to discharge outstanding matters as well as appeals to be filed in 2022 and beyond has been recognised and acted upon with five additional Appeal Commissioners due to commence work in the first half of 2022.
Quantum, case complexity and value
The quantum in dispute in relation to appeals received in 2021 totalled €275m. The 2,703 cases at hand at the end of the year were valued at €1.658m. During the year the TAC stated 22 cases to the High Court (down from 28 in 2020).
By these metrics, one can envisage a trend of increased complexity and our expectation is this trend will continue. This is particularly the case when it comes to the increased potential for litigation in the area of transfer pricing in the light of relatively newly implemented rules.
188 cases were scheduled for hearing in 2021, with around 15% settling prior to hearing and 3% settling post-hearing. Settlement is of course an option open to both parties in the course of a tax dispute process. It will be interesting to monitor settlement trends in the coming year.
Faced with the Covid-19 pandemic for much of 2021, with physical hearings being subject to government restrictions, 95 TAC hearings and all 164 case management conferences in the year were heard remotely. It is welcome that despite the challenges posed by the Covid-19 pandemic over the past two years, the TAC has utilised technology solutions available in order to minimise disruption to its work.
2021 has been yet another industrious year for the TAC and our expectation is that this progress will continue into the future.