Mr. Mark O'Mahony:

I am the Accounting Officer of the Tax Appeals Commission, TAC. I am before the committee in response to matters highlighted by the report of the Comptroller and Auditor General in relation to internal controls in the TAC in 2016. As members are probably aware, the decision to establish the TAC was made following a lengthy process of consultation, consideration and review by a number of different bodies. It was established pursuant to the Finance (Tax Appeals) Act 2015 and commenced its activities on 21 March 2016. The TAC is an independent body with its own Accounting Officer and Vote, although under the aegis of the Department of Finance.

The legislation made clear that the commission was to be a new body whose independence was enshrined in statute and which would have the power to adopt flexible and active case management procedures with a view to progressing and finalising appeals as efficiently as possible. The former right of appeal to the Circuit Court was abolished and the TAC now makes findings of fact which are binding on the parties. The only right of appeal from the TAC is to the High Court by way of a case stated on a point of law. Perhaps because of this change, the Legislature also introduced a requirement for the Appeal Commissioners to give written determinations in every case, an obligation to publish those determinations and the right to apply those determinations to appeals which raise similar issues of law.

Ms Lorna Gallagher and I were appointed as Appeal Commissioners at the end of 2015, prior to the establishment of the Tax Appeals Commission, following a recruitment process conducted by the Public Appointments Service. We were then reappointed pursuant to the 2015 Act when the TAC came into being. We have been appointed for a seven-year term, which expires in 2023, and we may then be reappointed for one further term. In June 2017, Mr. Conor Kennedy was appointed as a temporary commissioner, primarily to deal with the legacy appeals received from the Revenue Commissioners in the second half of 2016. His appointment is for a two-year period, which may be extended by the Minister for Finance.

Following its establishment, the Tax Appeals Commission took over the operations of its predecessor, the Office of the Appeal Commissioners, working with the same staff and from the same premises. When I was first appointed the office had a staff of four, including a principal officer seconded from the Department of Finance to assist with the planned establishment of the TAC. The TAC now has a staff of 14.5, including a part-time official responsible for human resources and training and our current head of office who is not a permanent staff member of the TAC but rather a principal officer on secondment from the Department of Finance. One member of staff has been absent on sick leave since August of 2017.

The staff of the TAC work in three distinct units, namely, scheduling, case management and administration. Of the 14.5 staff, 11.5 of those were appointed in 2017 or 2018. The most senior member of our permanent staff is an assistant principal. While it is clear from the foregoing that there has been a growth in our staff numbers, particularly in the past 12 months, it has taken us a long time to recruit suitable people and we are still significantly short of the necessary staffing levels.

The workload of the TAC is considerable. We assumed the existing caseload of the Office of the Appeal Commissioners and in the second half of 2016 a total of 2,731 legacy appeals were transferred to the TAC by the Revenue Commissioners. The 2015 Act furthermore provides that all appeals are now made by taxpayers directly to the TAC, whereas under the previous regime appeals were notified to the Revenue Commissioners in the first instance. This has resulted in a significant increase in the number of appeals which the TAC is required to process. In 2016, the total number of appeals received was 901 but in 2017 that figure had jumped to 1,751. The TAC is currently receiving an average of 150 appeals per month. The TAC had approximately 5,500 appeals on hand during 2017 and we believe the total amount of tax currently under appeal is in the order of €1.6 billion. By contrast, our budget, at €1.6 million, is approximately one thousandth of the amount of tax under appeal.

In addition to the appeals received, the TAC receives a significant volume of correspondence on appeals, all of which has to be logged, filed and responded to. The TAC may receive as many as 100 items of correspondence per day. In addition, the TAC is now the first point of contact for many taxpayers when they are dissatisfied with a tax issue or if they have a query in relation to same. Queries that may formerly have been made to the Revenue Commissioners are now being made to the TAC. The committee will appreciate that all of this absorbs a great deal of staff time and resources.

In addition to the appeals and correspondence workload, the TAC also has to meet all the governance requirements of a Civil Service body. With regard to governance, the TAC is akin to a small Government Department, with all necessary obligations having to be discharged alongside our primary task of hearing and determining appeals. While a Department might have several sub-offices such as a press office, corporate office, accommodation unit, a Minister's office and so on, the position in the TAC is that many staff cover several dedicated areas of responsibility as the TAC does not have sufficient staff numbers to assign specific members of staff exclusively to specific roles.

Our recently published annual report for 2017 shows that we have made very significant progress, both in addressing our appeals workload and in meeting our governance obligations. Headline achievements during 2017 include closing 693 appeals; listing 106 appeals for hearing; conducting 89 case management conferences relating to 479 appeals; publishing 35 determinations; conducting a public consultation exercise on our procedures; producing new guidance notes for appellants; populating our case management database with quality checked data relating to thousands of individual appeals; establishing case management and scheduling units within the TAC; publishing a comprehensively revised code of governance; producing a three-year statement of strategy; and appointing internal auditors and established an audit group. We have closed a further 821 appeals to date in 2018. As of yesterday, that figure stood at 860 appeals.

We are proud of all that we have achieved with the resources available to us and Commissioner Gallagher and I take this opportunity to acknowledge the enormous commitment the staff has shown to date, the unrelenting pressure through which they have worked, the multitude of different tasks they have managed and the daily co-operation, assistance and support they continue to provide. Notwithstanding the progress made, however, we are very much aware that a great deal more needs to be done for our stakeholders, particularly appellants and the Revenue Commissioners.

On the matter of staff and resources, the Tax Appeals Commission faces a significant risk from corporate memory loss if staff choose not to continue under the current pressures they face. Also, as the TAC does not the resources or adequate levels of delegated sanction, staff operate in the awareness that the TAC cannot, as it stands, offer them a career path. Leaving aside for a moment the issue of sanction and budgets, staffing risks are higher and more critical in a small office such as the TAC, as it does not have either the capacity to absorb the memory loss or the time and resources necessary to continuously recruit and train in new staff.

In addition to the main business of the office - being the adjudication and determination of tax appeals - there are strategic and structural issues that need to be addressed in order for the TAC to operate optimally. In this regard, we have dealings with and rely upon the Department of Finance, the Department of Public Expenditure and Reform, the Revenue Commissioners and the Office of Public Works.

The report of the Comptroller and Auditor General for 2016 correctly highlighted significant governance and related issues in the TAC. We fully accept the criticisms made in the report and we accept the recommendations of the Comptroller and Auditor General. We have implemented those recommendations to the best of our ability with the resources available to us. I believe the TAC's annual report for 2017 clearly shows that a great deal of progress has been made. We fully accept that more progress needs to be made but we cannot do more without additional resources. We have formally reported to the Minister for Finance pursuant to section 21 of the 2015 Act on the issue of additional resources, and we have met the Minister and officials from his Department to discuss this issue. We have commissioned a resource review to obtain an independent analysis of resources and the Minister has recently appointed a retired Secretary General to carry out a resource review for his Department. We hope that both these processes will be completed in the very near future and will enable the Minister for Finance and Public Expenditure and Reform to make an informed decision on our requests for additional resources for the TAC.

An efficient and impartial tax appeals body is an integral part of a state's system of taxation of its citizens. To meet our statutory mandate, there are legislative amendments that could assist the TAC in operating in a more efficient and effective manner. In this regard, the TAC recently suggested certain legislative amendments for consideration by the Department of Finance.

Our statutory mandate requires us to put in place the independent, effective and efficient tax appeals system envisaged by the 2015 Act. However, this cannot be achieved without adequate resources and the level of independence needed to apply those where we identify the need. Our 2017 annual report shows how much more was achieved in circumstances where, although we remained under-resourced, our resources had improved from the very low base obtaining at the commencement of the TAC in March 2016. Appellants should not have to suffer undue delays in the hearing of their tax appeals, but we are currently unable to prevent delays in the system in circumstances where we remain so significantly under-resourced.

In order to improve the tax appeals system and deliver an independent commission that will process tax appeals in as efficient and effective a manner as envisaged, it is our duty to assess the needs of the commission, identify the assistance we require and communicate that information to the relevant Departments in the form of a request for additional resources. It is to be hoped that the relevant authorities accept that we are driven to provide the optimal service for our stakeholders and that we are best placed to assess our needs.

I am attending today to answer whatever questions the committee may have, and we will be happy to follow up with any information that we are not in a position to provide now.