Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute to this debate. On behalf of Fianna Fáil, I welcome the Bill. For some time, we have highlighted the very significant issues arising in the Tax Appeals Commission, not least the lengthy backlog in the number of cases before it. The commission has only been in existence since 2016, having replaced an earlier entity, and it inherited a significant number of cases. From responses to parliamentary questions that we submitted, I understand that as of the end of June 2019, the commission has under its remit approximately 3,543 active appeals. I do not know if that figure has changed much since June but it is a very large number. The problem has been growing in recent times. I sincerely hope that the measures that have been implemented and which are about to be implemented will make a positive difference as having an efficient appeals system is an integral part of any tax system. Our system has not been efficient to date. This has caused reputational damage and has resulted in certain cases languishing within the system for a long number of years. This is not good enough.

The figures we have been provided through parliamentary answers and in the Oireachtas Library and Research Service briefing note on the Bill show that in 2016, more that 2,300 appeals were received and 200 were closed. In 2017, more than 1,700 appeals were received and fewer than 700 were closed, while in 2018, almost 1,700 were received and more 1,400 were closed. Although that was an improvement, the number which came in was still larger than the number which were closed. In 2019, the figures up to the end of June show that 672 were received and 580 files were closed. The gap is narrowing and the number of files being closed is approaching the number coming in but the backlog has not been addressed. That is why we welcomed the independent review, the O'Donoghue report to which the Minister of State referred, which made important recommendations on governance, independence, corporate supports, IT services, additional resources including at commissioner level - and I welcome the progress on that - as well as the recruitment of staff and the recommendation that the Public Appointments Service should be engaged with by the Tax Appeals Commission. It made proposals for dealing with backlogs and on process improvements, as well as recommendations about legislation to help the appeal commissioners, the staff working at the Tax Appeals Commission, to address the backlog. The last budget provided just under €3 million to implement the recommendations in the O'Donoghue report. We sought that and welcomed it and now the issue is about delivery.

The Minister of State provided an update on some of those key recommendations in his opening remarks. The Minister has authorised the appointment of three additional temporary appeal commissioners, two of whom will take up their appointments this month. That is a very welcome development. Additional administrative and technical posts were sanctioned and recruitment is nearing completion. Hopefully, within a short time, we will see the lack of resources in staffing being addressed. There was a shortage of resources compared with the volume of cases that came before the appeals commission, as well as the complexity of the cases. We welcome this. Fianna Fáil will support any measure that helps to further address the backlog and make the appeals commission even more efficient.

As the Minister of State noted, the appointment of a chairperson on a statutory basis was an important recommendation. That is now being given effect in this legislation, which lays out the role of the chairperson. That is an important and necessary reform. I also welcome the administration working group meeting regularly on the issues arising between the commissioners and the Revenue Commissioners on the administration of appeals. If we are being honest about it, issues have arisen between the Revenue Commissioners and the appeals commissioners on the process, where issues should be dealt with, whether the Revenue Commissioners were dealing in an open and transparent way, upfront, with matters that were brought to their attention or complaints that were brought to them and which might not have had to go as far as the appeals process. It is important that this is dealt with and that there is now regular contact between the commission and the Department of Fiance on governance and corporate supports. There had been a communications deficit between the appeal commission and the Department of Finance, so I welcome progress on that front.

I wish to raise a related issue, namely, the number of amended assessments which have been issued by the Revenue Commissioners recently. It has led to some concern about certainty and consistency. I am sure that in each case, Revenue could outline new information that came to its attention, changing interpretation of facts and perhaps of tax law. However I will outline the numbers. Revenue issued 337 amended assessments in 2015. It increased in the next year to 458 and in 2017 it was 664 and in 2018, it increased to 915. The number of reassessments made by Revenue has been growing significantly, resulting in a substantial increase in the liability from amending the assessment. There was one case in particular that accounts for a substantial chunk of that but there is a trend. I do not know what the explanation for that is but it is important that the reason the number of reassessments issued by Revenue has almost trebled over four years be examined.

I accept that can happen for a variety of reasons, including because of additional disclosures by the taxpayers concerned, because of the outcome of a Revenue audit, because of another compliance intervention or because of a previous expression of doubt in a tax return. These matters are laid out in a reply I received in the summer to a parliamentary question, but it is worth highlighting the issue on the floor of the House because it has been a marked trend that has emerged in recent times.

I turn to the other key aspect of the Bill which is completely unrelated, namely, the transposition of the prospectus regulation. As a party, we have no issue with it and support it. It will amend section 23 of the Companies Act 2014 as part of the transposition of the EU prospectus regulations directive. It is an important step. The key issue that is worth noting is that there is an updating of the definition of a local offer to reflect the increase in the threshold to €8 million from €5 million. That will mean that some small and medium enterprises, SMEs, making securities offerings up to the €8 million can submit a local offer filing to the Companies Registration Office, instead of having to issue a full prospectus. The Minister of State has made the point that it may mean that these SMEs will be able to access capital market funding in the future more easily as an alternative to relying on bank financing. That will be welcome if it broadens the potential sources of funding they can access without having to adhere to the strict requirements of a formal prospectus offering which, rightly, is heavily regulated. The regulation is being updated as a result of the transposition of these EU regulations.

We look forward to examining the Bill in a detailed manner on Committee Stage. The Minister of State has made reference to the Minister bringing forward what he says is a technical amendment which we will examine when it is brought forward.

I am happy to hand over to my colleague, Deputy Fleming.

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