The Irish Tax Appeals Commission (TAC) has recently published its 2022 Annual Report providing an insight into the activities and trends in its area of responsibility. 2022 was a record-breaking year for the TAC in terms of number of appeals closed and number of hearings scheduled. 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.
TAC 2022 Annual Report
2,661 appeals closed in 2022, up 49% on the 1,793 appeals closed in 2021.
1,502 appeals remained open at the end of 2022, an enormous reduction of 1,200 or 45% on the 2,703 appeals which were open at the end of 2021, with an average of 121 new appeals being lodged per month. 1,454 appeals were received in 2022.
Total appeals on hand reduced by 45% from 2021. This indicates steady progress, particularly in relation to legacy appeals (reduced from 264 to 227) and pre-establishment appeals (reduced from 53 to 24).
1,502 appeals on hand at year-end are of a value of €1.3bn of which €208m relates to 2022 appeals.
553 hearings were scheduled for hearing in 2022, a substantial increase on the 188 cases scheduled for hearing in 2021. 190 TAC Determinations were issued, valued at €292m.
1,652 settlements were agreed in 2022, valued at €111m.
In 2022, the Commissioners signed 16 cases stated pursuant to section 949AQ TCA 1997 to enable determinations to be appealed to the High Court (down from 22 in 2021).
Under a wide variety of metrics, 2022 was a record-breaking year for the TAC. The number of appeals closed and hearings held were significantly increased in comparison with previous years, and as a result the backlog of cases has substantially reduced.
Since its establishment, the TAC has closed almost 10,000 appeals involving a quantum of €6bn.
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 2022 from 264 to 227 and 53 to 24, respectively. This progress is impressive when one also considers that an additional 1,454 new appeals were filed in 2022.
We note a total of 1,502 cases on-hand at the end of 2022, which was an enormous reduction of over 1,200 (or 45%) on the 2,703 cases that were on-hand at the end of 2021. This substantial reduction in the backlog of TAC cases was facilitated by the recruitment of five additional Appeal Commissioners in early 2022 which greatly increased the TAC’s capacity, and the introduction of a new tiered commissioner structure to address the various types of appeal.
Quantum, case complexity and value
The quantum in dispute in relation to appeals received in 2022 totalled €208m. The 1,502 cases at hand at the end of the year were valued at €1.3bn. During the year the TAC stated 16 cases to the High Court (down from 22 in 2021).
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.
553 hearings were scheduled in 2022, which was a substantial increase on the 188 cases were scheduled for hearing in 2021, with around 28% settling prior to hearing and 1.5% settling post-hearing.
Increased use of technology
Following the Covid-19 pandemic which limited the scope for in person hearings, approximately 50% of the TAC hearings in 2022 were heard remotely. The TAC has effectively utilised technology in order to minimise disruption to its work.
Under a wide variety of metrics, 2022 was a record-breaking year for the TAC. The number of appeals closed and hearings held were significantly increased in comparison with previous years, and as a result the backlog of cases has substantially reduced. Since its establishment, the TAC has closed almost 10,000 appeals involving a quantum of €6bn.