Irish tax litigation – understanding the Tax Appeals Commission process
Irish tax litigation – understanding the Tax Appeals Commission process
Taxpayers who are dissatisfied with a decision or assessment of the Irish Revenue Commissioners (Revenue) have the right to appeal to the Tax Appeals Commission (TAC), which is the statutory body that has power to set aside, vary or uphold a decision of Revenue. The purpose of this insight is to outline the process involved in taking an appeal to TAC.
Notice of Appeal
Once in receipt of a notice of assessment / amended assessment from Revenue, a taxpayer has scope to accept or challenge the assessment. If the taxpayer has grounds to believe that the Revenue's decision-making or administrative process was flawed, the taxpayer may consider seeking leave from the High Court to judicially review the decision. More frequently, taxpayers challenge the merits of the decision made by Revenue rather than Revenue's decision-making or administrative process and do so by filing an appeal in the TAC. In this insight, we focus on the process for an appeal to the TAC. For further details on the process for High Court redress see our insight here.
The first stage in the appeal process to TAC is the completion and issuing of the Notice of Appeal with the TAC. This document must be filed within 30 days of the raising of the assessment by Revenue. Only in exceptional circumstances will this time limit be extended by the TAC beyond 30 days. It is imperative, therefore, that taxpayers are aware of the 30-day cut-off if considering this route and engage with appropriate advisors in a timely fashion.
The Notice of Appeal should be drafted carefully to ensure that all grounds of appeal are included to avoid losing the ability to run certain arguments at the hearing of the appeal that will ultimately follow. Strictly speaking, a ground of appeal that is not included in the Notice of Appeal cannot be later admitted unless the taxpayer can establish the ground could not reasonably have been stated at the time of the notice and so it is advisable to seek legal advice at an early stage to ensure that an appellant is not later precluded from availing of a legal argument at the hearing of the appeal.
Admission of Appeal
The Notice of Appeal is then issued to Revenue who can either consent or object to the appeal proceeding. If Revenue object to admission of an appeal, they must do so in writing, stating their reason for the objection, no later than 30 days after the date on which the copy of the Notice of Appeal has been sent to them. The grounds of that objection are then furnished to the taxpayer who is then invited to respond in writing to Revenue's grounds of objection no later than 14 days after the date on which notice of Revenue's objection has been sent to the TAC.
If Revenue has no objection to the consideration of the appeal, the TAC will nonetheless consider whether:
the appeal has been properly brought under S.949(1) Taxes Consolidation Act 1997 (TCA)
the appeal is frivolous (this does not involve any view of the actual merits which will be a matter for later determination)
the appeal is a late appeal and, if so, whether there are grounds for a late appeal.
A decision not to accept an appeal will be notified in writing to the taxpayer and to Revenue and any such notification must specify the reason(s) why the appeal has not been accepted.
Case Management Conference (CMC)
Whilst not obligatory, frequently matters require the convening of a CMC that typically deals with the setting of case directions and other matters that may arise during the course of a case progressing. The TAC or either party to the appeal may order / request CMCs to ensure the completion of the proceedings in an expeditious and fair manner and, in terms of directions, these might typically include:
timeframe for the exchange of Statement of Case, Witness Statements and Outline of Arguments
any order for the disclosure of documents
timeframe for serving of an agreed book of core documents
timeframe for serving of a book of legal authorities
procedural matters associated with the appeal, for example staying the appeal to provide an opportunity for engagement by the parties with a view to resolution of the appeal or to take account of related appeals
Statement of Case
Once an appeal has been admitted, the TAC will usually issue a direction for the taxpayer to submit a Statement of Case. The time period for submission of this document can vary but typically it is to be filed within 60 days from the date of the direction. In terms of content, the Statement of Case should include, amongst other matters:
An Outline of Relevant Facts is the first real chance for a taxpayer / Revenue to set out in a degree of detail the relevant facts associated with the case. Sometimes parties will append a longer form document to the formal Statement of Case form.
Citation of the statutory provisions and case-law supportive of the party's position in the appeal. In practice, taxpayers will usually reserve the right to rely on other sections as part of the hearing bundle submissions.
The parties may include reference to potential witness evidence within the Statement of Case but frequently that is done by way of subsequent notification of the proposed witnesses and an outline of the evidence they are to provide.
A separate Agreed Statement of Facts may be agreed as between the taxpayer and Revenue but, in many cases, the facts of the matter may be disputed and it must be borne in mind that appeals may involve addressing events that are historic.
The taxpayer will often be directed to deliver its Statement of Case to Revenue before Revenue are required to deliver their Statement of Case. A commercial decision must also be made when filing the Statement of Case in deciding whether to apply to have the hearing conducted in private, in circumstances where the default position is that TAC appeals are held in public. If the TAC permits a private hearing, the TAC's decision will likely be redacted to conceal information that would reveal the identity of the parties. Nonetheless, it should be borne in mind that even where the TAC permits a private hearing, the facts of the matter may become public if the decision of the TAC is later the subject of a further appeal on a point of law by way of case stated to the High Court.
The burden of proof lies with the taxpayer and so it is incumbent on the taxpayer to present evidence that supports its case and appropriately discharges that burden.
For further information and helpful pointers with respect to leading evidence at hearing (both witness and documentary) see our insight here.
Outline of Arguments / Legal Submissions
The Outline of Arguments is essentially a written legal submission that sets out in detail the taxpayer's legal argument by reference to appropriate statutory provisions and case-law.
In terms of sequencing, it may be the case that a taxpayer submits its Outline of Arguments to TAC (with a copy to Revenue) in the first instance with Revenue given a right to respond within an agreed period. Whilst the timing for serving of Outline of Arguments can again vary from case to case, typically Outline of Arguments are exchanged after the sequential exchange of Witness Statements and a number of weeks prior to a scheduled hearing date. However, this approach can vary depending on the preference of the parties and TAC.
List of Documents and Hearing Bundle
The last submission to the TAC involves the delivery of a hearing bundle. In the first instance, a List of Documents must be filed with the TAC to identify the documents upon which the taxpayer and Revenue intend to rely at hearing. This is a joint taxpayer / Revenue submission. This will ultimately materialise in an Agreed Book of Documents to be presented at the hearing. A separate Agreed Book of Authorities must also be delivered to the TAC. Whilst the timing for delivery of the List of Documents and Agreed Bundle can vary, typically this step is taken at least 1 month prior to a scheduled hearing date.
Hearing and Determination
The hearing process itself is in many respects similar to a court hearing. Both the taxpayer and Revenue may be represented by external advisors or appear in person to present their oral arguments and be questioned by the Appeal Commissioner(s). Witnesses are generally required to give evidence orally at hearing with the opportunity for each party to cross-examine the other's witnesses. As a practical matter, witness statements may be prepared and, depending on the agreed directions, are sometimes exchanged between the parties. However, it is unlikely that a statement will be admitted into evidence without the witness giving oral testimony. Expert witnesses will generally also be required to give evidence orally with expert reports usually exchanged prior to the hearing. Depending on the number and complexity of witness evidence, hearings can therefore take place over a number of days or weeks as necessary in any given case.
S. 949AF TCA provides that, although determinations can be delivered orally, they must be reduced to writing and S. 949AJ TCA provides that the determinations are to be reasoned determinations specifying findings of fact. S. 949AJ(5) TCA provides that parties shall be notified of a determination (and any right of appeal) within 21 days after determining the appeal.
Thereafter, the determination is to be published within 90 days (even in instances where a hearing was in-private albeit with both parties having a right to redact the draft determination once provided by TAC to them). There is no set timeframe within which the TAC has to give its determination and so the timeframes can vary from case-to-case largely depending on complexity and the resources available to the TAC.
Further right of Appeal
Either party's right of appeal is limited to an appeal on a point of law to the High Court. For further details on the process for a case stated by the TAC to the High Court or directly by seeking leave to judicially review a Revenue decision see our insight here.
Settlement and Mediation
Whilst many disputes will go the distance to full hearing and determination, taxpayers should be aware of the potential opportunities to agree a settlement at any stage during the litigation process and this may achieve a saving of time and costs. Frequently we would see a dual-track process involving preparation for TAC hearing and ongoing settlement discussions in tandem.
Ireland currently does not have a legislative framework specific to alternative dispute resolution for tax disputes. In a Public Consultation submission made by Revenue to the TAC in 2017, Revenue referred to the fact that many disputes are resolved through facilitated negotiation or mediation.
The Irish Tax Institute has recommended the introduction of an ADR mechanism bespoke to tax disputes and the 2018 O'Donoghue Report highlighted the lack of one compares unfavourably to the more developed ADR frameworks in place in other common law jurisdictions such as the UK and Australia. We await further developments in this space.