Ms Cora O'Brien:

Reform of the tax appeal system has been a priority for the Irish Tax Institute for many years. As far back as 2008, we published a comprehensive report on the rules and procedures governing Irish tax appeals. Our appeal system has been very outdated and in need of reform for a long time. This consultative process is therefore an important step in getting our system right. We welcome the fact that major reform of the appeals process is now underway, by way of new legislation, and that attention is being given to the matter by the Government and by members of the Oireachtas, especially this committee.

An appeals mechanism is an intrinsic part of an equitable tax administration system and should deliver equal treatment for all taxpayer groups at low compliance cost. That is why this issue is so important and deserves attention. A number of measures in the new heads of Bill are very welcome, including the publication of determinations in an annual report, tighter and more transparent procedures generally governing the management of the appeals process for everyone, and a better regime for the appointment, tenure and removal of the Appeal Commissioners. However, there are two fundamental changes proposed in the heads of Bill that are of concern to the Irish Tax Institute. These are the abolition of the in camera rule so that all tax appeals will be heard in public and the removal of the taxpayer's option for a Circuit Court rehearing.

Taking the first of these issues, the new Bill proposes to remove confidentiality in the appeals process after 50 years by abolishing the in camerarule. Taxpayer confidentiality has been at the heart of the Irish tax administration system for almost 50 years and it has been one of the pillars on which our system has been built. The 1967 Income Tax Acts introduced solemn declarations to be made by the Appeal Commissioners and by Revenue officers which included references to keeping taxpayer information confidential. It has served the system well and we have compliance rates on tax of up to 99% in this country. There has been talk in this session about the practice of other countries and a move towards publication. We need an appeals system that is suitable for our country. We are a small country in terms of population, no bigger than a mid-sized city in the UK. Countries such as New Zealand do not have publication. It is a small economy also and points to the fact that not everyone is going down this road.

The removal of the right to confidentiality is even more serious because the consultation carried out did not mention or propose this issue. Any proposed change to the in camerarule goes to the heart of the system. This was not made clear to the public in the consultation. Taxpayers may feel that they have a genuine case to appeal but they are going to be forced to reveal the most personal aspects of their finances in order to enter the appeals process.

While it is clear that all parties here seek transparency of process, this can be done without naming taxpayers and putting under the spotlight their financial information. There is precedent for this in the family courts that is worth exploring. The Irish model of publication for tax defaulters has been in existence for 20 years and rightly or wrongly, the public associates publication with wrongdoing. Publishing taxpayer names and details in appeal cases could infer easily in their minds that the taxpayer has not behaved appropriately or has done something wrong. It is not clear whether there will be any limitations on media access to these hearings. Media interest is likely to be high and the taxpayer could be portrayed wrongly as having problems with Revenue or being somehow non-compliant. Experience to date is that the reporting of taxpayers who have a Revenue issue can portray them as tax evaders, which is not the case in this regard.

The second issue is that taxpayers will be forced to appeal to the High Court, should they not accept the decisions of Appeal Commissioners. At present, a taxpayer has the option of having the facts of the case reheard at the Circuit Court if he or she loses the appeal. This is an important option for taxpayers because few can afford to take the matter directly to the High Court. It appears as though this option is being removed in the heads of the Bill and taxpayers who do not agree with the decision of the Appeal Commissioners must appeal directly to the High Court. This is a prohibitively expensive option for all but the biggest taxpayers. As losing at the High Court will cost a taxpayer approximately €100,000 at a minimum, no average taxpayer could afford this process. It therefore discriminates against the average taxpayer and will be a significant deterrent to average taxpayers seeking a hearing on a tax issue. It is not clear why the Circuit Court rehearing has been removed. In summary, the combined effect of holding the case in public and removing the taxpayer's option for a Circuit Court rehearing means that a taxpayer must now make a stark choice either to pay the amount Revenue states he or she owes - even if the taxpayer does not believe it is correct and fair - or have his or her financial details published for everyone in the country to see and, if they lose at appeal, to go directly to the High Court with all the expense involved. We do not believe this is fair to taxpayers.

There are a number of other related issues in the heads of the Bill, including the need for timely issuance of determinations, the importance of appropriate staffing for the office and the need for a hearing in each individual case. In our submission on the consultation, the Irish Taxation Institute also recommended the establishment of a separate forum for small cases involving less than €50,000, which is not mentioned in the heads of the Bill. I am conscious that there is limited time to address these issues and have focused my opening remarks on matters of greatest concern to taxpayers. I thank members for their time and look forward to any questions they might have.