Aideen Hayden (Labour)
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I welcome from the Office of the Appeal Commissioners Mr. John O'Callaghan, tax appeal commissioner. The format of the meeting will be that Mr. O'Callaghan will make some opening remarks, which will be followed by a question and answer session to clarify any matter that needs to be clarified.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the committee to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

Mr. John O'Callaghan:

Essentially, I am here because of some of the submissions made at the last hearing of the committee which we did not attend. We did not receive notice of it in time to enable us to attend. We thought the best way to deal with the matter was to make submissions to the committee, as we have done, and also to attend, give evidence and answer questions members might wish to put to us. There are only two of us and we obviously have considerable experience as we were both appointed about 22 years ago. Given that our hearings are held in camera, what we do is not widely known. We thought the most appropriate thing to do was to come to be of assistance to the committee and make a few points we thought were important. That is why I am here.

I will briefly outline the scope of the office. Effectively, we act as an interface between Revenue and the taxpayer on all taxes.

I am looking here because I wanted to talk about our costs, but I am taking it from the last full set of the finance accounts to December 2013. I am just going to the sources of income, all of which we are quite intimately involved with - income tax, VAT, excise duty, corporation tax, stamp duty, customs duties, capital acquisitions tax, capital gains tax and local property tax. We do not have a function in regard to the training and employment levy or motor tax receipts but we do in regard to everything else that has been read out, and also the plastic bag tax, which has not featured but we have had one or two cases on it. We are involved in anything covered under any of those headings. Under the heading of “scope of the work”, in the 22 years since we were appointed there has been a considerable increase in the scope, apart from the fact that new taxes were added. For instance, stamp duty appeals, vehicle registration tax appeals, and custom duties appeals, among others, have all been added on, but much more importantly, the nature of the work has changed hugely. VAT, to be blunt, is a bit of a monster. It is rooted in European law. We frequently have cases where there are perhaps three or four ring binders of European precedents and complex arguments about European and Irish case law involving barristers on both sides. Essentially, the work we do has become much more legalistic in the past 20-odd years than was the case previously.

Self-assessment was introduced in the late 1980s. Prior to that, people were using the appeals system as a way of deferring payment of tax. They were dragging things out. The legislation on self-assessment reversed all of that. It said that if one has not paid one’s tax and submitted one’s tax return, one will not get an appeal. Things have changed dramatically since then. The way the Revenue Commissioners approach matters has changed. When we started, we had quite a lot of cases in which the Revenue Commissioners might be arguing about mileage allowances, for example, but that is all gone now. It is much more practical in its approach. Some of the cases we hear are short but many of them are very lengthy. We have had several cases lasting weeks.

Perhaps a very important point to make which people may not be generally aware of, although I am sure everybody here is aware of it, is that there is no limit on the jurisdiction in regard to matters we hear. On one hand, it could be tens of millions, while on the other, if one goes to the District Court the jurisdiction is €10,000 to €15,000 and in the Circuit Court it is €30,000, perhaps going up to €50,000. There is no limit on cases we hear. I have a couple of cases running at the moment involving €10 million in tax. The work has become much more technical, particularly with the European dimension.

We act as an interface between the Revenue Commissioners and the taxpayer. We go around the country. A taxpayer in Kerry can have his or her appeal heard in Killarney or Tralee. We counted it up this morning and there are 18 different locations in which we hear appeals. When we are down the country we typically hear appeals in the local courthouse, but sometimes they are held in a hotel. In terms of the cases before us, frequently the taxpayer will turn up on his or her own. We do not award costs. We do not have the power to do so, which is probably a good thing, but more and more the issues are technical and detailed.

In terms of our resources, I will start by giving the committee the figures from December 2013, as they have not changed very much. The voted expenditure, current and capital, for the Office of the Appeal Commissioners for 2013 was €409,000. That represents two assistant secretaries, namely me and Rónán Kelly, and, in that year, one executive officer and one clerical officer. We had a total complement of four. We have gained one clerical officer since then, so now there are five people in the entire office. For many years we have had great difficulty dealing with the recruitment embargo, which has prevented us from bringing on board researchers or whatever else, which would have been very helpful. To blow our trumpet a little bit, Vote 10 for the Office of the Appeal Commissioners is €409,000. I note that Vote 15 is for the Secret Service, which comes in at €635,000. The Vote for the Office of the Chief State Solicitor, which is about 60 times bigger than us, is €28 million. The Office of the Ombudsman costs €6.5 million, which is roughly 14 or 15 times more than the cost of our office.

To stress the scope of our resources, we made some detailed submissions in writing to the committee. I do not propose to take up the committee's time at this phase, but I do wish to raise a couple of points in regard to proposals in the heads of the Bill. On the matter of public hearings in the heads of the Bill, initially I wondered about it, but while I am personally in favour of it, that will have to be carefully considered. I do not mean this as a criticism of the Revenue Commissioners for a minute, because I am on record as saying the Revenue Commissioners do a wonderful job. The one circumstance we do not want to come about is where someone is effectively threatened that their case will go to appeal and the appeal on their tax affairs will be held in public. I could imagine lots of situations where someone might be sensitive about issues or they might be afraid of going public, and where the matter of the appeal being public would work against them. I am in favour of the proposal generally, despite the comment, but there would probably need to be pre-hearings at which there could be consideration of what would be made public.

The Bill, as drafted, raises questions. Section 949Y deals with public hearings. It starts out by saying that every hearing of an appeal shall be public other than the preliminary hearing, and subject to subsection (2). Under subsection 2(a) the Appeal Commissioners may give a direction that a hearing or part of a hearing is to be held in camera if they consider that restricting access to the hearing is necessary in the interests of public order or national security. That is fair enough. I think that would be unusual enough. The second category of exemption is to avoid serious harm to the public interest - ditto. The third category is to maintain the confidentiality of sensitive information. That is immediately brought into question. The fourth category of exemption is to protect an individual’s right to respect for his or her private and family life or, lastly, in the interests of justice. The point in subsection 2(a)(iii) is to maintain the confidentiality of sensitive information, but that is trumped by subsection (3), which states: “Nothing in subsection (2) shall be taken to mean that the grounds on which access to a hearing is to be restricted extend to maintaining the confidentiality of a person’s taxation, financial or business affairs." I do not propose to go into an analysis of that here. That is a matter for the committee to consider. Issues arise as to whether this essentially says that maintaining the confidentiality of sensitive information does not extend to maintaining the confidentiality of a person’s taxation, business or financial affairs. In other words, if I am running a small shop in a town and the Revenue Commissioners are auditing me and I am going to appeal, perhaps my accounts are going to be public and my competitors will be able to see how I am doing and, as I read the draft Bill now, I will not be able to claim that the information should be kept confidential because my business affairs are sensitive. That is a matter which requires further discussion, but it is important because it is such a dramatic change in the nature of the appeal hearings. It is a cultural thing as much as anything else, one that needs considerable debate both for and against. It is a difficult issue.

The other area that comes up regularly is the matter of our jurisdiction. We have jurisdiction over, essentially, mostly tax assessments, which sometimes quantify the amount of tax due. Sometimes there might be a decision by the Revenue Commissioners, such as a refusal to grant artistic exemption for a book or a refusal to grant medical expense claims or whatever else, but regularly, there are matters dealing with discretions afforded to the Revenue Commissioners.

I will give the committee an example of a case I heard not so long ago. It was within the past couple of months. I will change the facts a little bit. A couple had separated in the late 1990s. They had agreed that they would continue to be taxed as though they were married, as they are perfectly entitled to do. In the early 2000s, the wife went to the inspector of taxes and stated that she wished to be singly assessed. The inspector then explained to her that as a consequence, the maintenance being paid by her husband would, in the future, be taxable in her hands. Up to that point, because they were treated as if they were still a married couple, there was no tax effect on transfers between them. She paid tax on that amount. Then, quite a lot of years later, the husband discovered that this had been going on. His tax advisers sent in a series of tax returns claiming tax relief, for about ten years, on the payments he had made to his wife and in respect of which she had paid tax. The Revenue Commissioners said, "We know we did not inform you that your wife had changed the circumstances, but we felt we could not because she was a separate taxpayer. Now you are looking for tax refunds in respect of moneys on which she has paid tax, but there is a four-year time limit on the refunds. Therefore, you cannot have them."

There are a series of issues in this, with which I will not bore the committee, not least of which is section 955(2)(a), which deals with the four year time limit and circumstances in which the Revenue Commissioners do not need to enforce it. In fact, the Revenue Commissioners had acted in a manner which I believed I did not have jurisdiction to overrule. There is a possible argument regarding a Supreme Court case - the Keogh case - which is to do with the taxpayers' charter. The simple thing to do, which is what I urged it to do, was to allow, in the circumstances, the tax relief to the husband in respect of the amounts on which the wife had paid tax. Strictly speaking, I am not sure I had that jurisdiction. The inspector had failed to inform the husband. Generally, the principle is that we do not have jurisdiction over the behaviour of the Revenue Commissioners; we have jurisdiction over the quantum of tax. A similar point applies in the UK. The First-tier Tribunal, which is the equivalent of our office, would not have jurisdiction for equitable remedies such as legitimate expectation.

Another example might be an extra-statutory concession where the Revenue Commissioners might do a deal with a building company and allow meal allowances, etc., on a certain scale. There might then be a disagreement between the Revenue Commissioners and the builders. The builders would appeal and we would say that it was an extra-statutory discretion and that we do not have jurisdiction. Mr. Justice Frank Murphy in the Revenue Powers Group recommended that our jurisdiction be increased to take account of this. As we see it, we do not have that function at the moment. This is an important area which needs to be addressed and is not currently addressed in the Bill.

There are various other matters to which we have adverted in our written submissions. Another heading is "expertise required to carry out the functions of the review commissioner". We are of the view that it has become so legalistic that it would need a legal degree. Neither of us has a legal degree, but we have been doing the job for 20 years and we have been gradually educated about many issues. Coming in cold would be difficult for someone who is not a long-term tax expert or does not have a legal background. Those are the principle points I wished to make, but there may be questions.

Aideen Hayden (Labour)
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I have one point before I hand over questioning to Deputy Pearse Doherty. It relates to Mr. O'Callaghan's covering letter. He wished to put on the record of the House that he is disputing some of the evidence given in the oral submissions to this committee on the level of cases with which his office deals. Does he want to bring this to the committee's attention?

Mr. John O'Callaghan:

I do not think this is a big issue overall. The tax collection system works pretty well. From our point of view, the idea that we have a large number of cases is simply wrong. This came up six months ago or so when the Comptroller and Auditor General was auditing our little operation. That office was interested in a large number of cases which, on the Revenue system, were shown as being under an appeal stop. A really important point to make about something being under appeal is that, when someone appeals an assessment, it does not necessarily mean the person wishes to have a hearing. If a person gets an assessment and does not appeal it within the appropriate time, which is mostly 30 days, the tax becomes payable. What one does, if one gets an assessment, is to appeal it. Some 99.99% of appeals never proceed to a hearing, much as 99.99% of parking tickets never go to the District Court. The ticket is paid. A person may engage in correspondence or whatever else. Similarly, the appeal function is, for most people, merely a way of enabling them to continue to correspond with the Revenue Commissioners and to come to an agreement about the quantum of tax they owe.

What I think has happened is that in the Revenue Commissioners there are a lot of appeals. Someone appeals, the case is under discussion, perhaps the case has been settled, but the appeal stop has not been taken off. When the Comptroller and Auditor General came to us and we showed it the actual number of files we had which were live, the number was tiny. As we said in our submission, the number is perhaps in the low double digits. However, there seems to be some sort of an accounting issue throwing up numbers of taxes under appeal. Of course, "under appeal" refers not just to appeals to the Appeal Commissioners but also appeals to the Circuit Court, the High Court, now the Court of Appeal, and the Supreme Court. To put on record, this is a simple error. We have a tiny number of cases in front of us. If there were any sort of a backlog, I would have anticipated a lot of letters from the Revenue Commissioners and from taxpayers looking for information on the progress of the case. We do not have any such letters. We have no one requesting us to proceed with this case, that case or the other. I am not saying that we do not have a work in progress. However, there is no iceberg-type effect.

I was in two minds whether to put that on the record, but I think it was better to have done it.

Aideen Hayden (Labour)
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The matter is included in the draft report of this committee, so I do not think it is any harm to clarify the issue for the record.

I will now move to Deputy Pearse Doherty. I propose that, as normal, we have slots of ten minutes, with questions and answers, and if there are any supplementary questions, we can come back to them.

Pearse Doherty (Donegal South West, Sinn Fein)
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I wish to delve into this figure issue further. It seems that this was the motivator for the witnesses' request to address the committee. I would like Mr. O'Callaghan to clarify for the committee a statement which was given by Mr. O'Leary. Mr. O'Callaghan takes issue with the statement and the impression which was given. Mr. O'Callaghan states that Mr. O'Leary's statement gave the impression that this office was responsible for almost 600 cases which have been under appeal for more than five years. How many cases are under appeal in the Office of the Appeal Commissioners for more than five years?

Mr. John O'Callaghan:

None that I know of. Let me explain what can happen. We give a decision. The taxpayer has two options when we give a decision, if he or she loses. There is the option of a rehearing in the Circuit Court in most instances. Alternatively, there is the option of an appeal to the High Court on a point of law. If appealing to the High Court on a point of law, the taxpayer must notify us within 21 days of us giving the decision that he or she wishes to go to the High Court. The taxpayer requests a case stated. We have checked the numbers. In the past ten years, roughly one tenth of the applications for a case stated have resulted in cases going to the High Court. In 90% of them, people decide not to proceed to the High Court. It is an expensive business. It takes time and so on.

Pearse Doherty (Donegal South West, Sinn Fein)
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What about the Circuit Court?

Mr. John O'Callaghan:

That is a rehearing. We fall out of the picture completely.

I do not have the numbers to hand, but it is a very small number of people who go for re-hearing in the Circuit Court.

Pearse Doherty (Donegal South West, Sinn Fein)
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Where would the figure come from? I presume the Department has not plucked the figure of 600 from the sky. Given the fact that the Office of the Appeal Commissioners had been in correspondence with the Department last year telling it not to use these figures, why would the Department come before this committee and state something that the commissioners have refuted?

Mr. John O'Callaghan:

That is exactly why I am here. I have no idea.

Pearse Doherty (Donegal South West, Sinn Fein)
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So there are not 600 cases under appeal for more than five years. I assume there are not 30 cases that have been under appeal for more than ten years.

Mr. John O'Callaghan:

No, absolutely not. When Deputy Doherty says "under appeal", we are not seized of any such case. It might be that cases are stated with which people have just not bothered, and which are certainly nothing to do with us. It is up to those people if they wish to proceed. Within our office's bailiwick there is no such thing at all. I think it is a numbers thing. I do not think-----

Pearse Doherty (Donegal South West, Sinn Fein)
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Take me through this like a child, to use that phrase. If somebody makes an appeal on a tax issue, whether it is corporation tax, a large tax bill, the plastic bag levy or property tax, is the Office of the Appeal Commissioners notified of each and every appeal?

Mr. John O'Callaghan:

No. What currently happens is that Deputy Doherty as a taxpayer would get an assessment. He would write to Revenue saying it is too much and explaining why. He would then enter into correspondence with Revenue. It might be a year or two before Revenue would correspond with our offices to request a date for the hearing. Revenue waits for the appeal to be ready to be heard. Initially, Revenue will get one letter showing in a couple of sentences what the taxpayer is saying, and frequently it does not have enough evidence from the taxpayer. The parties have to go to and fro and, eventually, if the issue is still live, they will contact our office to request a date, and we give them the date for the hearing. If the taxpayer thinks Revenue is sitting on the case and not listing it, he or she has a specific right, under section 933 of the Taxes Consolidation Act 1997, to apply to us directly for a hearing. That is an unusual situation. It is nearly always Revenue that liaises with us about the time and date of the hearing.

Pearse Doherty (Donegal South West, Sinn Fein)
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There could be a situation where there are 600 cases that have been under appeal for five years, but it is not the fault of the Office of the Appeal Commissioners that they have been under appeal for that time.

Mr. John O'Callaghan:

We might never have heard about them.

Pearse Doherty (Donegal South West, Sinn Fein)
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The Revenue Commissioners could have 600 cases of which they would have been notified as the first point of contact. Some may be before the High Court or Supreme Court and some may just not be passed on to the Appeal Commissioners.

Mr. John O'Callaghan:

The Deputy is quite correct. Some could still be sitting in Revenue's office, and they would all be under the heading "Appeal", but most of them would not have come near us.

Pearse Doherty (Donegal South West, Sinn Fein)
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Regarding the assessment that there is €770 million pending resolution of disputed issues, what quantum of money is before the Office of the Appeal Commissioners at any given time?

Mr. John O'Callaghan:

Before I came here, about two hours ago, I was looking at a pile of papers and asking one of our executive officers what it was. She said it was a group tax avoidance scheme in which a particular firm of accountants is involved, which has about 70 people in it. I have no idea how much tax is involved. It might be €70 million for all I know. We have not got the full submissions yet. We do not list the actual total of tax assessed when we are summarising the cases. I do not know the answer to the Deputy's question.

Pearse Doherty (Donegal South West, Sinn Fein)
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The evidence that was provided - I keep on going into banking inquiry mode where it is all evidence - was that people are entitled to an automatic full re-hearing and are using this process to draw out the length of time. In terms of the percentage of cases that come before the Appeal Commissioners and go for a full re-hearing at the Circuit Court, what is Mr. O'Callaghan's best guesstimate or what are the figures if he has them?

Mr. John O'Callaghan:

Frank Daly, who was then chairman of the Revenue Commissioners, had numbers on that in one of the Estimates debates, I think. I was quite surprised that a relatively small number went for a re-hearing in the Circuit Court. We took it as being reasonably complimentary of what we were doing. It might be 10%, off the top of my head. We do not have a record of that. Once it has gone from us, the Circuit Court starts from scratch. It is not an actual appeal from us but a re-hearing.

Pearse Doherty (Donegal South West, Sinn Fein)
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If we assume there are 600 cases under appeal for more than five years, as was stated, under this new legislation, they will automatically come to the Office of the Appeal Commissioners first.

Mr. John O'Callaghan:

We made quite a lengthy statement about that. Something is going to have to be done about it because there will be a huge amount of duplication of correspondence.

Pearse Doherty (Donegal South West, Sinn Fein)
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If I might pick up on that, I have read the statement and the only duplication I can see is that the taxpayer would write to the Appeal Commissioners, who would write to Revenue, and Revenue would write back to the Appeal Commissioners.

Mr. John O'Callaghan:

We would then have to write back to the taxpayer. What will happen is-----

Pearse Doherty (Donegal South West, Sinn Fein)
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So that is two letters per review from the Office of the Appeal Commissioners.

Mr. John O'Callaghan:

That mechanism is equivalent to requiring that every parking ticket should go through the District Court, even though the vast majority of them are going to be paid and will never go near the District Court.

Pearse Doherty (Donegal South West, Sinn Fein)
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To take the analogy of the parking ticket, I think the situation is that everybody who appeals a parking ticket should send the correspondence to the person who issued the ticket in the first place. Every appeal on a parking ticket is sent to the appeals process and is dealt with by the court.

Mr. John O'Callaghan:

That is a fair comment, but I am suggesting that out of all the appeals that go to Revenue, only a tiny number actually request a hearing.

Pearse Doherty (Donegal South West, Sinn Fein)
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Will this legislation not stop this? Is that not the whole point? There are hundreds of cases with Revenue and it has not passed them on because, as Mr. O'Callaghan says, it is just a way for taxpayers to try to facilitate more time and engagement. If we are to have an appeals process, should it not be an appeals process? If I appeal my parking ticket - if I get one - then I am going to court and the appeals system and am not looking for extra time to haggle with the parking warden.

Mr. John O'Callaghan:

I have now stretched the analogy rather a lot but, essentially, in the parking ticket system, there would have to be another mechanism whereby the Deputy was applying for time to pay as well as possibly appealing. In the tax system, people mostly start sending information to Revenue after they have submitted their appeal. Correspondence then ensues and in the vast majority of cases agreement is reached. To try to use the appeal function as a way of getting the Revenue Commissioners to smarten up, and I am not suggesting for a minute that they need to, is over-stretching the appeal function. Revenue is well capable and its systems are very good.

Pearse Doherty (Donegal South West, Sinn Fein)
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I appreciate Mr. O'Callaghan's insight into this as it is a process that takes place in cameraand I am not familiar with it. If I had a dispute with Revenue over a particular tax, if the new legislation were to be enacted, and I were to appeal, I would obviously appeal to the Office of the Appeal Commissioners. Does that still allow me time to engage with Revenue?

Mr. John O'Callaghan:

It would have to. Otherwise the whole system would be clogged up. That is what happens all the time. Most of them are agreed. I would guess that out of 50,000 assessments issued, maybe 400 or so would get to us. That shows how many fall away by agreement between the parties.

Pearse Doherty (Donegal South West, Sinn Fein)
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Mr. O'Callaghan is saying that out of 40,000----

Mr. John O'Callaghan:

I am saying that we would hear maybe 0.1%----

Pearse Doherty (Donegal South West, Sinn Fein)
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Of originally disputed assessments?

Mr. John O'Callaghan:

Yes, of assessments. If 50,000 assessments issue, I would say maybe 400 or 500 go to appeal.

Pearse Doherty (Donegal South West, Sinn Fein)
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How many of those assessments issued would be disputed? Some of them would be just accepted.

Mr. John O'Callaghan:

I do not know. A lot of them might be issued as per the taxpayer's own figures, in which case he or she would not appeal.

Pearse Doherty (Donegal South West, Sinn Fein)
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I do not see a huge problem with the duplication, and I think it is good in principle that people appeal to an independent body. However, given the resources that Mr. O'Callaghan's office has, I can understand the concern he would have about even a limited amount of additional bureaucracy.

The last thing I want to ask concerns public hearings. There was discussion here about whether hearings should be held in camera.

I am in favour of having hearings in public. It has been mentioned to me, and Mr. O'Callaghan made the point, about people's concerns about having their issues disclosed and having to argue in public, although there are many exemptions in the legislation whereby the commissioner could hold a hearing in camera. In a situation in which somebody from Revenue has not treated a person as fairly as he or she should, would the fact that the in camerarule is gone facilitate Revenue officials to be more considerate in their approach in the knowledge that all the documentation could come before a public appeals court? I am not suggesting this is happening. Today, the Financial Services Ombudsman published a report which stated that the significant drop in the number of people who have made appeals was a result of the legislation for naming and shaming that had been passed, because financial institutions resolved cases before they went to appeal. Could the same apply to the Revenue Commissioners?

Mr. John O'Callaghan:

It might. On occasion, people complain that they are being victimised or whatever. Revenue is not perfect and there will be some individuals who are difficult and take a dislike to a client, as they call them. It is unusual. In our experience, Revenue is pretty good in its dealings. I am in favour of it being in public as it will make people more aware of their rights. I regularly read newspaper reports quoting the Revenue Commissioners' comments on tax as if they were law. Revenue's guidelines are not necessarily the law at all. However, there is a risk that many people would be afraid of a public hearing about their tax affairs. I had not thought about the possibility that public hearings would put manners on Revenue. I do not know which way to go on it. In so far as it would put manners on any of us, it is a good idea.

Pearse Doherty (Donegal South West, Sinn Fein)
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Does Mr. Callaghan not believe that, given the number of ways it could be held in camera, there would be enough comfort in the legislation for him?

Mr. John O'Callaghan:

No, because of the following clause: "Nothing in subsection (2) [Which is a list of the many items to which the Deputy referred] shall be taken to mean that the grounds on which access to a hearing is to be restricted extend to maintaining the confidentiality of a person's taxation, financial or business affairs." Confidentiality of one's taxation, financial or business affairs is not grounds for having a hearing in private.

Pearse Doherty (Donegal South West, Sinn Fein)
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If it were, which is the current situation, no hearing could be in public. The clause must be there to ensure what exists now is no longer the situation, but it is predicated on the list of exclusions.

Mr. John O'Callaghan:

I am in two minds about it.

Pearse Doherty (Donegal South West, Sinn Fein)
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I appreciate that.

Mr. John O'Callaghan:

Many people in various business, commercial or personal situations would feel that their financial circumstances are particularly sensitive and would want their appeals to be heard in camera. This would prevent it from happening. Maybe it is the way to go. Many people would have a view on it.

Tom Barry (Cork East, Fine Gael)
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Mr. O'Callaghan is very welcome. I am glad to hear the number of live files is lower than what was stated. The wording is probably not ideal. Every time somebody goes to appeal with the Revenue Commissioners, it is a pre-hearing, a negotiation or an engagement.

Mr. John O'Callaghan:

It is to prevent the guillotine from coming down. If one does not appeal an assessment within 30 days, it becomes payable. To get a late appeal, one must go through another process. An appeal is primarily to keep one's options open. Although, technically, a matter may be decided before us or the Supreme Court, only a tiny number are.

Tom Barry (Cork East, Fine Gael)
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Given that I run a business, I am well aware of the procedure. In my experience, Revenue is very fair. There should be a timeframe for the length of time one spends with Revenue before a case trips into the jurisdiction of the Office of the Appeal Commissioners. Tightening of time concentrates everybody's minds. I am completely against holding these appeals in public. Many businesses have come through very tough times and do not necessarily want to show everybody that they are not as strong as people might perceive because, if they do, their suppliers might not give them credit, which would be very difficult for them. The number of people who have non-core debt which they are trying to negotiate with banks would become apparent, which would be an infringement of their rights. Holding an appeal in cameraensures it can be scrutinised at a later date if there is an issue. Nobody here would like to put their financial dealings out on the table. The Revenue Commissioners do not always get it right, as they must interpret legislation. I know many tax officials who will sit down and tease out a point. This would cross a Rubicon, although I can see why some people would like it. Business people would typically decide to settle with Revenue rather than go to an appeal and risk putting all their financial details in public.

Mr. John O'Callaghan:

What about expanding the exclusion I read out and ensuring people's financial affairs do not feature? One of my fears would be that the taxpayer might perceive Revenue was using the appeal almost as a threat. I do not mean this as a criticism of Revenue. Say a person was running a Spar shop in Banagher and had one competitor, a Mace shop. If this person were claiming an office room in his or her home as an expense in his or her business accounts, Revenue could propose an appeal, at which the business accounts would be made public and the person's competitor would see how vulnerable the business was. It should be possible at a pre-hearing for such a person to ask for his or her accounts to be made available to the Appeal Commissioners but excluded from the public domain. The net issue of whether a person can use a room in her or her house and office and the related expenses and tax information could be heard in isolation from the personal circumstances, which could be kept private. This is the sort of proposal I discussed with Deputy Pearse Doherty. The solution may lie in such an area.

Tom Barry (Cork East, Fine Gael)
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If the person is found to be in the right, none of it should be in the public domain. If a person is found to be right, why would any impediment apply to his or her business?

Mr. John O'Callaghan:

Would that not apply to every court case? Should any hearings be in public? Would that mean anybody who is not convicted-----

Tom Barry (Cork East, Fine Gael)
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I buy the argument. Sole traders' accounts are not made public, while limited companies have abridged accounts. There is leeway. I encourage Mr. O'Callaghan to try to expand the list of exemptions. This is probably up for discussion. If a process is in appeal, does the four-year rule still apply?

Mr. John O'Callaghan:

Section 955(2)(b) states that nothing shall prevent an inspector from amending assessment to give effect to a determination of the Appeal Commissioners. Therefore, even if it is outside the four-year rule, if we give a decision that one is entitled to one's refund, the inspector may amend the assessment. It says "nothing shall prevent an inspector", but does not say he or she has to. I referred to this obliquely earlier. In the case to which I referred, which was outside the four-year rule, I said I could not force the inspector to do it, although it seemed to me that any proper inspector should have acted in this fashion.

The answer to the Deputy's question is that they can give effect to the appeal hearing outside of the four-year period.

Tom Barry (Cork East, Fine Gael)
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Is the Appeal Commissioner's determination final?

Mr. John O'Callaghan:

No. The Circuit Court or the High Court may determine. We now have power to go directly to the European Court of Justice for European law matters, but that principally concerns VAT.

Tom Barry (Cork East, Fine Gael)
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Would there be a benefit to having certain criteria to allow for a final determination by the Appeal Commissioner?

Mr. John O'Callaghan:

Possibly.

Tom Barry (Cork East, Fine Gael)
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Rather than the matter dragging on?

Mr. John O'Callaghan:

Yes, possibly.

Tom Barry (Cork East, Fine Gael)
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On the time process, I am a great believer in tying down time. Would Mr. O'Callaghan be in favour of having set times for an individual to deal with Revenue and to go to the Office of the Appeal Commissioners to conclude a matter?

Mr. John O'Callaghan:

It is like minding mice at a crossroads.

Tom Barry (Cork East, Fine Gael)
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One can be minding many things at a crossroads. Does he agree that a set time period would make people concentrate?

Mr. John O'Callaghan:

That is true. At the moment there is no time limit and I think there probably should be. I agree with the Deputy. It is desirable that there would be a time limit. However, people tend to miss time limits and then the courts generally are reluctant to rule people out on procedural matters. When one's job is to decide on an issue in dispute between two parties, I find it difficult to decide whether I should throw them out if the time limit has been missed. If they have an argument, one is inclined to want to let them make their argument, even if they slipped up on a procedural point.

Tom Barry (Cork East, Fine Gael)
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I can understand that there will be some wriggle room but there is a big difference in a procedure going from two years to ten years.

Mr. John O'Callaghan:

For instance, one could easily bring in a rule to state that when Revenue receives an appeal, it must refer to the Appeal Commissioners within, say, three months or six months, allowing a reasonable period of time. The Revenue Commissioners are good on agreeing to that sort of arrangement. Revenue tends to be in favour of anything that makes things more efficient. This is a good suggestion.

Tom Barry (Cork East, Fine Gael)
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I can guess the answer to this question. Does the Office of the Appeal Commissioners need more staff, particularly in certain areas?

Mr. John O'Callaghan:

Yes; we have needed more staff for quite a while. We have needed a couple of legal researchers, or certainly one good legal researcher. Reporting on cases and drafting cases stated takes a certain level of skill that is above and beyond normal experience. It is very difficult to get people at that level and we certainly need them. The embargo on appointing staff has been a real problem for us.

Tom Barry (Cork East, Fine Gael)
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One hopes that might be starting to change. I thank Mr. O'Callaghan for his full and frank responses. I presume the determinations are printed out in full detail.

Mr. John O'Callaghan:

No, there is a delay because of manpower constraints. We generally give oral decisions and we sometimes give written decisions. Mostly our decisions are oral decisions. We sign off on the form with regard to the quantum of tax.

Tom Barry (Cork East, Fine Gael)
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A number of years ago the EU decided to publish all the single farm payments to every farmer across Europe. Every paper contained lists of personal payments. This was challenged and was found to be wrong and was subsequently removed. However, that information was still out there. The Appeal Commissioners deal with very sensitive issues and there is a slim margin between a business surviving and not surviving. I refer to my earlier point that I would welcome Mr. O'Callaghan's views on the list of conditions as to what can be made public.

Mr. John O'Callaghan:

I agree with Deputy Barry. If it gets to the point where the function of going to appeal will put people off, that will destroy the whole purpose. We have a small office, yet all disputes between Revenue and the taxpayer are funnelled through our office. In my view that is quite a tribute to two sets of people - Revenue and the tax practitioners who are dealing with Revenue. Some of the cases that come to our office can last for weeks and are highly complex. The fact that the rest of the system works is, in my view, quite a tribute to those people. On the Deputy's point, if people are to be intimidated about going to appeal, that is to be avoided at all costs. It is better to stick with the current system than bring that into the picture.

Tom Barry (Cork East, Fine Gael)
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I agree. Are there specific liaison officers in Revenue who deal with the Appeals Commissioners? Can the Appeal Commissioners second staff from other bodies to help with the workload?

Mr. John O'Callaghan:

We have not done so. Historically, a clerk was assigned to the Appeal Commissioners. There is a person in the Revenue Commissioners who still has that title and we have used him on a couple of occasions where there has been an issue.

Tom Barry (Cork East, Fine Gael)
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Could that person be used as an intermediary?

Mr. John O'Callaghan:

On several occasions I had a cup of coffee with one of the Revenue Commissioners, who is now retired, in an effort to sort out our personnel issues, and Revenue was very helpful. We have informal contacts but nothing that formal. In general we keep quite a distance. Revenue is very conscious of staying away from us. It suits it to have someone in the middle whom it can blame.

Kieran O'Donnell (Limerick City, Fine Gael)
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I hope I will not be going over old ground with my questions as I had to step out of the meeting for a time. Typically, how long does it take for an appeal hearing in the current system?

Mr. John O'Callaghan:

It could take five minutes or it could take three weeks.

Kieran O'Donnell (Limerick City, Fine Gael)
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Typically, how long is a person waiting for an appeal hearing?

Mr. John O'Callaghan:

I will answer in some detail. In many cases, unless we have proper submissions beforehand, we would not know what was happening. The appeal would be heard and people would make arguments in front of us without having worked them out. For technical cases, we required and asked for full written submissions. The taxpayer is obliged under what used to be section 957 to provide in detail the grounds for an appeal before he or she is entitled to an appeal. We found that requiring those submissions put discipline on people. When we receive a taxpayer's submission, we look for replies from Revenue. Once we have received a taxpayer's submission, he or she will have a case heard within two months. When Revenue requests a listing for a hearing, we write immediately to the taxpayer and ask for his or her submissions within two months. If this is received within two months, the hearing will be held within another two months.

Kieran O'Donnell (Limerick City, Fine Gael)
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Are there issues about the process or resources that would speed up the appeals process?

Mr. John O'Callaghan:

No. Getting the appeals listed is not the problem. The system is functioning satisfactorily, in my view. We have not felt the need to have another commissioner to hear appeals.

Kieran O'Donnell (Limerick City, Fine Gael)
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That is my question.

Mr. John O'Callaghan:

When the residential property tax came into being, it was suggested that there would be more appeals, but I did not think there would be and I will explain. I cite the example of a difference of €300,000 between the value of a house as against what Revenue decides its value is. The tax is 0.18%, call it 0.2%, of €300,000. One per cent of €300,000 is €3,000 so 0.2% is €600. If a person decides to go to appeal the amount of €600 and hires a valuer and so on, it is not worth it. My sense was that there would not be that many appeals about the residential property tax and we have not had one yet.

Kieran O'Donnell (Limerick City, Fine Gael)
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How many people are currently in the appeals process and waiting to go into the process?

Mr. John O'Callaghan:

I do not know because it is within Revenue. I know how many cases we have listed and what I am scheduled to do. I was actually scheduled to travel to Athlone tomorrow, but, in fact, my colleague is doing it for me.

Kieran O'Donnell (Limerick City, Fine Gael)
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How many Appeal Commissioners are there?

Mr. John O'Callaghan:

There are two.

Kieran O'Donnell (Limerick City, Fine Gael)
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Is that number relatively low?

Mr. John O'Callaghan:

One has to allow people time to make submissions. It will take them a month or two to put full written submissions together on what are often big legal points. Then one has to give Revenue at least one month in which to reply. It will have to examine and research the issues involved.

Kieran O'Donnell (Limerick City, Fine Gael)
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How does Mr. O'Callaghan feel about the fact that the Circuit Court route can no longer be taken? What is his professional opinion?

Mr. John O'Callaghan:

Not many cases go before the Circuit Court and I do not see a lot of harm in it. Revenue would state it was only in a case involving capital acquisitions tax that it would have a right to a re-hearing in the Circuit Court. Why should it be at a disadvantage? One might have the odd mad Appeal Commissioner who might make a bad decision and there would be a desire to go to the Circuit Court to have the facts corrected. That could happen.

Kieran O'Donnell (Limerick City, Fine Gael)
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What percentage of appeal hearings end up-----

Mr. John O'Callaghan:

It is pretty small.

Kieran O'Donnell (Limerick City, Fine Gael)
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Very small.

Mr. John O'Callaghan:

As I understand it, it is very small.

Kieran O'Donnell (Limerick City, Fine Gael)
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On appeal hearings being heard in public, I am really thinking of the small man. I am thinking of the sole practitioner who, for example, has a shop in a town or village and who, in many cases, is hanging on by a thread. Would Mr. O'Callaghan be nervous about such cases being heard in public because of the impact it could have on his or her business?

Mr. John O'Callaghan:

The reason I am in favour of hearings being held in public is to inform people of their right to disagree with Revenue. I am not suggesting Revenue is a big Kafkaesque institution, but people are not aware of their rights and my principal reason is to assist people in general. If the process, instead of having the function of assisting, turns it into something which intimidates, that should not be done. The process is in place to assist people in their dealings with a much larger body.

Kieran O'Donnell (Limerick City, Fine Gael)
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If one were to hold a hearing in public, will Mr. O'Callaghan explain how this would assist a small business?

Mr. John O'Callaghan:

If, say, a person was running his or her own little company; we said we accepted that it was a legitimate company and that we did not accept Revenue's view that it should be just ignored and we found that the person could claim these expenses, etc., there might be journalists present and people would find out about these matters. They would, as a consequence, know more about their basic rights and think more about tax issues. It is an education issue as much as anything else.

Kieran O'Donnell (Limerick City, Fine Gael)
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If one had a process by which it was held in public but under which a person could make a case to Mr. O'Callaghan, as an Appeal Commissioner, that it be held in private, what criteria would he use to hold it in private?

Mr. John O'Callaghan:

What is the public going to lose in not having access to such a case? Second, how much of it will be of relevance to the public? How much a person has in his or her bank account is not something somebody else is entitled to know. There is a point of principle at issue in most cases and that is what needs to be published.

Kieran O'Donnell (Limerick City, Fine Gael)
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Does Mr. O'Callaghan see merit in having different limits such that, for instance, if a business was classified as small, a different set of criteria would apply to it than to a larger company? Could he see some hearings being held in public and some in camera, with points of principle being published? Has he had time to reflect on this issue?

Mr. John O'Callaghan:

Not really, no. When I saw the draft heads of the Bill, I was taken aback. I thought, "I do not know about that," but then I came around to the purely personal point of view that, on balance, I would like hearings to be held in public. However, there are big problems in that regard. It is a little like the elephant problem in that one knows what an elephant is, but it is hard to define precisely what it is. To answer the Deputy's question about the criteria, one has to trust the person involved in a hearing. Personally, I would amend the section to give a lot more discretion over personal financial matters, etc. I would generally be biased in favour of excluding purely personal details.

Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. O'Callaghan would look at it from the point of view of allowing the public to see the points of principle at issue.

Mr. John O'Callaghan:

Absolutely. However, members make laws; I do not.

Kieran O'Donnell (Limerick City, Fine Gael)
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But Mr. O'Callaghan is working at the coalface.

Mr. John O'Callaghan:

Yes.

Kieran O'Donnell (Limerick City, Fine Gael)
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The issues concern whether the process can be speeded up without affecting its integrity. Mr. O'Callaghan dealt with the issue in the Circuit Court. Personally, I would have reservations about hearings being held totally in public on the basis that one was dealing with people's livelihoods. I note that there are cases in which one has individuals who are blatantly flouting the system, but, equally, there are many people who are doing their best where it is purely a matter of interpretation between Revenue and the individual business person concerned.

Mr. John O'Callaghan:

To pick up on a point the Deputy made about flouting the system, we would have-----

Kieran O'Donnell (Limerick City, Fine Gael)
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Abusing the system.

Mr. John O'Callaghan:

Even if they are, our job is to determine how much somebody owes in tax. If the CAB brings somebody in and a barrister for the CAB wants to tell me that the person concerned has been creating trouble since he was aged nine years, etc., I actually do not care much about this. All I care about is how much tax the person concerned owes. It is not my function to correct other ills in society through the tax system. It is about how much tax a person owes and that is the end of it. If somebody has been delaying, messing or whatever else, ultimately, I am not there to award points for good conduct, either to Revenue or the taxpayer. What tax is owed is the issue. My colleague takes the same view. We are not there to police people's morals or whatever else.

Kieran O'Donnell (Limerick City, Fine Gael)
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In terms of public hearings, would Mr. O'Callaghan like to see the provision being redefined such that where it involved personal aspects of a case, a hearing would not be held in public?

Mr. John O'Callaghan:

I have been pretty open-----.

Kieran O'Donnell (Limerick City, Fine Gael)
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I appreciate that.

Mr. John O'Callaghan:

I want to stress that it is not our job to make the law. We have always stayed in the middle.

Kieran O'Donnell (Limerick City, Fine Gael)
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I appreciate that.

Mr. John O'Callaghan:

I am speaking individually.

Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. O'Callaghan brings expertise in being an Appeal Commissioner.

Mr. John O'Callaghan:

I do and would certainly be in favour of protecting people. This is an important right people have and it should not be circumscribed to make them afraid of it.

Kieran O'Donnell (Limerick City, Fine Gael)
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Thank you, Mr. O'Callaghan.

Aideen Hayden (Labour)
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I have a couple of questions to ask. Nearly all of us are concerned about the same aspects of the proposed legislation. I share the concerns of Deputies Tom Barry and Kieran O'Donnell. When I saw it first, I thought so what if it was in the public domain, but the more I explored the issue, the more concerned I became in an inverse way. The less well-off will be more inclined to be afraid of a process that brings their position into the public domain they will be.

Mr. John O'Callaghan:

I agree.

Aideen Hayden (Labour)
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This is particularly the case with groups such as the elderly. My parents would pay any amount of tax rather than have to ring the Revenue Commissioners, let alone make an appeal. That any of their neighbours would know a personal detail such as how much they earn or how much their pension is would absolutely be a no-no in making an application to the Appeal Commissioners. It is important to bear in mind that people value their privacy.

A couple of proposals came before us previously. Deputy Kieran O'Donnell mentioned the idea of having a quantum. In other words, where a dispute involves an amount less than €10,000, €20,000 or €30,000 and does not revolve around a precedent, perhaps guidance might be given in the proposed legislation on the protection of privacy.

Mr. John O'Callaghan:

That could certainly be done.

Aideen Hayden (Labour)
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I accept Deputy Kieran O'Donnell's point that Mr. O'Callaghan is at the coalface of the system and that his view is of value, even if it is, as Mr. O'Callaghan stated, a personal one.

We are looking at proposed changes to legislation, but I am not entirely sure what is wrong with the existing structure. We seem to have been given the impression that there are millions, almost billions, of euro involved and that we need to change the appeals process to bring that money down to earth.

Mr. John O'Callaghan:

No. That certainly is not so.

Aideen Hayden (Labour)
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That now appears to be the situation. We are not dealing with hundreds of cases. One of the documents Mr. O'Callaghan submitted to the committee deals with the number of appeals handled by the Appeals Commissioners. The yearly statistics for the years from 2010 to 2014 show that between 361 and 488 requests for hearing were received by the Appeals Commissioners and the appeals heard in those years dealt with between 329 and 1,089 issues. As that covers the five years from 2010 and 2014, with 488 requests it indicates approximately 100 per annum.

Mr. John O'Callaghan:

No. We would have about 400 requests for hearings each year - up to 500 maybe.

Aideen Hayden (Labour)
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I am sorry. For example, roughly how many hearings took place last year?

Mr. John O'Callaghan:

I would guess between the two of us we heard, maybe, 400 hearings.

Aideen Hayden (Labour)
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With 400 requests and 400 hearings, it would seem to indicate that the process works reasonably speedily.

Mr. John O'Callaghan:

We think so, yes.

Aideen Hayden (Labour)
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That is in a fairly slender margin with only four employees and a budget of approximately €400,000.

Mr. John O'Callaghan:

That is also what we think.

Aideen Hayden (Labour)
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I am not clear as to what is wrong here. However, one of the issues relates to openness and transparency. The Appeals Commissioners' determinations are in the main oral rather than written.

Mr. John O'Callaghan:

Yes.

Aideen Hayden (Labour)
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Is there any reason the Office of the Appeals Commissioners could not be given additional resources and make its determinations in writing but with the names redacted so that they cannot be identified?

Mr. John O'Callaghan:

None whatsoever.

Aideen Hayden (Labour)
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There is no reason it could not be done.

Mr. John O'Callaghan:

Precisely.

Aideen Hayden (Labour)
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With additional resources the Office of the Appeals Commissioners could give the kind of public information we appear to want to have without getting into the issue of public hearings in the main.

Mr. John O'Callaghan:

Absolutely, yes.

Aideen Hayden (Labour)
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What is wrong with the current system if it is not broken bar a little bit of additional transparency? Mr. O'Callaghan said that the only place people can go if they have an issue with the finding of fact is the Circuit Court.

Mr. John O'Callaghan:

That is because the High Court does not find facts.

Aideen Hayden (Labour)
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It is only on a point of law and it is also an incredibly expensive process. The Circuit Court is a safeguard if there is a dispute over facts.

Mr. John O'Callaghan:

Exactly.

Aideen Hayden (Labour)
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It does not seem to be broken to me with the exception of some additional resources.

Mr. John O'Callaghan:

I also made a point about our jurisdiction to deal with Revenue discretions. I often feel we are not really-----

Aideen Hayden (Labour)
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Basically at the moment the Office of the Appeals Commissioners has no equitable domain.

Mr. John O'Callaghan:

Exactly, and that does not feel right sometimes. We should have discretion over Revenue discretions. For instance, a person seeking a subcontractor's certificate must have complied for what is called the relevant period of three years with all the requirements of the tax Acts, making returns on time, paying taxes on time, etc. A person who submitted one VAT return late will lose. There is a provision allowing the Revenue Commissioners to overlook certain misbehaviours in tax terms, but we do not have a power to review that discretion. Somebody might come into us and say: "I was only late once and it was a small amount of VAT. It's over the top. Give me the cert." That is a Revenue discretion; we have no power to review it and cannot do anything about it.

Aideen Hayden (Labour)
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In other words, Revenue may give discretion on four out of five occasions and not on the fifth.

Mr. John O'Callaghan:

We can do nothing.

Aideen Hayden (Labour)
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The Office of the Appeals Commissioners can do nothing about it. Having an equitable jurisdiction would increase the number of cases in which it could make a determination.

Mr. John O'Callaghan:

Exactly. Having a full equitable jurisdiction in things like declaring who owns what land, etc., would not necessarily be appropriate, but there has to be some scope for us to review Revenue discretion. I believe we should have an appeal over Revenue discretion. I have had cases where somebody has claimed that his wife actually owned half the land because of equity, that she had worked, etc. I have always held, as has my colleague, that is a matter for the High Court. That is the equitable jurisdiction of the High Court. I do not suggest we should stray into that kind of territory. However, with regard to practical cases, we should be able to move away from the rigid legal basis on which we currently operate essentially to be fair.

Aideen Hayden (Labour)
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Mr. O'Callaghan made a submission to the committee in October which contained some interesting points. We have covered the issue of the public hearings. He also referred to written submissions and the Freedom of Information Act. He had concerns that FOI applications could be made that would cover all documentation relating to an appeal even though the matter of the appeal might have only hung on one aspect. I ask Mr. O'Callaghan to expand.

Mr. John O'Callaghan:

This goes back to Deputy Barry's views about matters being public. That is exactly the point. We thought perhaps there should be some restriction there to protect people.

Aideen Hayden (Labour)
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If this legislation were to proceed, would Mr. O'Callaghan recommend some addition to the legislation based on the operation of FOI over a range of documents that are not actually the subject of the appeal?

Mr. John O'Callaghan:

Again, being a little po-faced, it is not my position to recommend legislation, but if the Vice Chairman forces me to say it, I will say, "Yes".

Aideen Hayden (Labour)
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Mr. O' Callaghan also referred to the term of office as it is unclear as to it being five or seven years. He suggests that it should be more like the appointment of judges, which struck a chord with me. He asked where does someone, who is appointed as an Appeals Commissioner for seven years, go afterwards. The chances are that he or she would go to a tax firm. We have seen that kind of thing happen with city and county managers who are appointed for a number of years. I ask Mr. O'Callaghan to elaborate on that.

Mr. John O'Callaghan:

The Vice Chairman is elaborating along the lines about which we were concerned. Independence is important. Some of the cases in which we are involved could have an impact on the State, running to perhaps €50 million or €100 million. If the person is up for review in two years and the Minister for Finance is the same person, there could be some pressure to find for the State. I just think those things are best avoided rather than being speculated about. These terms need to be very carefully considered. Ireland is a small place; the UK is much bigger. I would be worried about limited-term appointments both from the point of view of objectivity and simply because people know one another.

A former Appeals Commissioner who goes back to working with one of the big firms is very likely to have made decisions in the previous year or two on clients of that firm. We see the same firms of solicitors and tax advisers all the time. One has to be a bit careful about matters. Even on the issue of whether an Appeals Commissioner should hear a case, I ask myself two questions. First, would I have any compunction in finding against this taxpayer? Second, would I take any pleasure in finding against this taxpayer? If the answer to both of them is "No", then generally I will hear it. However, there might be cases where I could not hear it. For instance, it might involve a relative or someone who had been a client of mine. Even if I was completely comfortable objectively, it would not look right. It is very hard to lay down the rules, but ultimately one must rely on oneself and whether one feels comfortable. There are many reasons one might excuse oneself from a case.

Aideen Hayden (Labour)
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Mr. O'Callaghan hears a number of appeal cases. As a general rule what kinds of people make appeals? Are they all big corporations with massive tax bills? What proportion of them are ordinary people?

Mr. John O'Callaghan:

Quite a few are ordinary people. We had a recent case with a former Attorney General representing the Revenue where the taxpayer was a pensioner. He claimed that his wife, being a qualified adult dependant, was entitled to the single person's tax credit. He came in on his own. In many of those cases, we are effectively put in the guise of defence counsel because the person would not necessarily know the tax minutiae, etc. It is our function to decide. We are not like a judge in a civil case where whoever makes the best case wins. Our job is to decide what the right amount of tax is.

Aideen Hayden (Labour)
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The Office of the Appeals Commissioners has to level the playing field.

Mr. John O'Callaghan:

Absolutely. We have to decide what is the right amount of tax. Even if the taxpayer is not aware of the law, we must decide it. A lot of people come in on their own in respect of artistic exemption and all sorts of other things.

Aideen Hayden (Labour)
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Would 50% be represented by tax experts?

Mr. John O'Callaghan:

No. Years ago we had a lot more of those. Now, however, the Revenue tends to be very practical. Of course, it also costs the latter money to go to appeal. I am sure the Revenue has internal guidelines which state that anything less than-----

Aideen Hayden (Labour)
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Would half be represented?

Mr. John O'Callaghan:

No, I would say that perhaps 10% of the cases involved relate to individuals. Many of the cases we have relate to large amounts of tax and complex VAT arguments. I dealt with a case over a period of three days last week in respect of which a claim for a VAT refund of €2 million was submitted. Again, there are barristers involved on both sides and many different European laws came into play.

Aideen Hayden (Labour)
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Plenty of ordinary people would make appeals.

Mr. John O'Callaghan:

Yes, there would be many ordinary people. That is one of the benefits of the process being informal. People represent themselves and they do not pay any fees.

Aideen Hayden (Labour)
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So our concerns about this taking place in public are quite reasonable.

Mr. John O'Callaghan:

I am of the view that it is a very big issue. I am in favour of it, as already stated, on a purely personal level. I am for ever explaining to people what I do and my friends always tell me to shut up about tax when I am out socialising. I am a proselytiser.

Aideen Hayden (Labour)
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They are not afraid to invite Mr. O'Callaghan into their homes in case he starts-----

Mr. John O'Callaghan:

No, they are not.

Tom Barry (Cork East, Fine Gael)
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What is the driving force behind the proposed legislation? Is it necessary to legislate because the figures involved are essentially incorrect? Many businesses are taking out insurance in respect of audits, because the cost relating to the latter is quite substantial. As was stated earlier, the proposed legislation could have a greater impact on more people in this country than we realise if it proceeds in its current form. What was the genesis of the proposed legislation, why is there a need for it and what will it achieve?

Mr. John O'Callaghan:

I honestly do not know. We are not involved in the genesis of it at all.

Tom Barry (Cork East, Fine Gael)
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I accept that my questions may perhaps be rhetorical in nature. When seemingly incorrect figures are put forward in support of an argument, I really become concerned.

Mr. John O'Callaghan:

As the Deputy is aware, that is primarily why I am here.

Aideen Hayden (Labour)
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Does Deputy Rabbitte wish to pose a question?

Pat Rabbitte (Dublin South West, Labour)
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I have had a couple of offers to write my memoirs and I would like to ask Mr. O'Callaghan whether, if they have artistic merit, I could-----

Mr. John O'Callaghan:

From what I know of the Deputy's speeches, I am sure they will.

Aideen Hayden (Labour)
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So the Deputy is seeking an artistic exemption.

Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome Mr. O'Callaghan. There is a slightly new dimension in terms of what is proposed in that the public will be aware of what is involved. In addition, it will also be fair to both Revenue and individual taxpayers. Mr. O'Callaghan referred to a point of principle. There are probably people who are not aware that they can go to the Office of the Appeal Commissioners.

Mr. John O'Callaghan:

For sure.

Kieran O'Donnell (Limerick City, Fine Gael)
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Perhaps we need to consider whether there are ways in which the system can be streamlined. It is always possible to improve a system and perhaps we could do that in this instance, particularly in light of the volume of cases being dealt with. Mr. O'Callaghan has made a very important input into the process in which we are engaged and I thank him for it.

Aideen Hayden (Labour)
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During the initial part of this process, the point was made that in some other jurisdictions - including Canada, New Zealand and the United States - public hearings are held. Is Mr. O'Callaghan aware of the position in countries such as France, Germany, the Netherlands, Spain and Portugal?

Mr. John O'Callaghan:

I am not, to be honest. In Ireland, if one is a taxpayer, one goes for rehearing in the Circuit Court. It is exactly the same as if one were before an appeal commissioner. The hearing is held in cameraand one does not have to be represented. The judge simply rehears the case. If one goes to the High Court, however, it all takes place in public. The position is the same in the Supreme Court. Therefore, one suddenly finds oneself in the limelight if one wishes to pursue one's case on a point of law.

Another minor point is that if a taxpayer wins in front of the Appeal Commissioners on a point of law and if the Revenue challenges the finding in the High Court, he or she could be obliged to pay the Revenue's costs if he or she loses the case. Some barristers would not want to seek costs in those circumstances. However, that is an aspect which might be considered. I have always thought the current system unfair. Where someone wins a case in the first instance and where the Revenue, on a point of policy, wants to challenge the finding, then I do not think the taxpayer should pay the latter's costs in the High Court or the Supreme Court.

Aideen Hayden (Labour)
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Where the individual won in the first instance.

Mr. John O'Callaghan:

Exactly, yes. However, why not corporate taxpayers also? Just as a point of principle-----

Aideen Hayden (Labour)
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Is Mr. O'Callaghan stating that it would be in the public interest?

Mr. John O'Callaghan:

Exactly.

Pat Rabbitte (Dublin South West, Labour)
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In the context of Mr. O'Callaghan's remarks regarding the mix of cases, involving different kinds of taxpayers, etc., that would come before the Appeal Commissioners and as Deputy O'Donnell pointed out, everyone is not aware of the existence of the appeals system. When watching the proceedings in my office earlier, I noted Mr. O'Callaghan's remarks about the kind of cases with which he deals. He instanced, among others, a case involving a very large amount of VAT. I am of the view that he exploded a few of the myths relating to the scale of the crock of gold out there that supposedly remains uncollected.

Our corporation tax rate is much written about and is always in the ether in one way or another, whether this be as a result of a couple of US Congressmen taking the opportunity to have a lash at the Irish system or whatever. Does the issue of multinational companies not being liable to pay the full 12.5% rate of corporation tax ever come before the Appeal Commissioners? Do such companies have their own professional tax advisers who resolve matters directly with the Revenue or would one of them ever come before the Appeal Commissioners and state - outlining the reasons for same - that it is not liable to pay the full rate of 12.5%? In jurisprudence terms, could the Appeal Commissioners have decided cases in the past about which we, as legislators, would not know anything?

Mr. John O'Callaghan:

I do not think so. We do not tend to see multinationals very much. This is despite the fact that all sorts of tax issues arise. For example, the definition relating to tax relief on research and development expenditure is quite complicated. I have one case, which has been ongoing for some time, regarding whether the company involved qualifies. There is perhaps €1 million or more in expenditure involved in that case. We do not to see the multinationals that often. What tends to happen is that they iron out the basis on which they are going to operate before they commence operations here. Thereafter, they go off and operate as planned. That is the sense I have of it. Some multinationals come before us on various issues that arise. However, those issues would be technical in nature and they would have nothing to do with the overarching structure. We might be presented with arguments in respect of double taxation agreements or whatever on occasion. My answer to the Deputy's question on whether we have made decisions regarding multinationals and the operation of the 12.5% corporation tax rate in respect of them is "No". I am not aware of any case relating to that matter.

Pat Rabbitte (Dublin South West, Labour)
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I thank Mr. O'Callaghan.

Aideen Hayden (Labour)
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I thank Mr. O'Callaghan. If there are no further questions, I will conclude proceedings.

On behalf of the committee I thank Mr. O'Callaghan for appearing before the committee and participating in the meeting and for the material he supplied to the committee. Following this meeting, the clerk will prepare a report on the proposed Bill which will be circulated to Members for observations. Following approval, it will be proposed to lay the report before the Dáil. A copy will also be sent to the Minister for Finance.