Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I thank Deputy Michael McGrath for agreeing to share time with me.

I acknowledge that this is important legislation. It deals with an issue that has been discussed at length at both the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and the Committee of Public Accounts in the past year or two. We support the Bill, with which the Committee of Public Accounts will be happy as we have discussed the lack of adequate resources and commissioners to deal with the cases which lead to a build up and a backlog, both in monetary terms and in the number of appeals. We are happy to see progress being made in dealing with the issue. I want to start on a positive note by saying we acknowledge this.

I want to highlight the following in order that people will understand it. The commission was set up in 2016 and given a budget allocation of €1.5 million. In year one over one third of the budget was returned unspent. In 2017 it received an allocation of €1.7 million and again about one third was returned unspent to the Exchequer at the end of the year. I am pleased that from a budget of €1.7 million last year, the Estimate for the Tax Appeals Commission, there has been a fantastic increase in 2019 to in excess of €3 million, which represents almost a 100% increase. That is great and we want to see the money being properly spent and utilised and I hope not being returned to the Exchequer, as happened previously.

From that point of view, we appreciate the strides that have been made, but the Minister will have to accept that we are playing catch-up. This issue should have been dealt with in 2016 when the legislation was being established, rather than setting up an office, seeing how it went and coming back after a couple of years only to realise it was not working efficiently. These issues were foreseeable. The Committee of Public Accounts was clear in its recommendation when it stated: "Prior to the establishment of the Tax Appeals Commission in March 2016 there was a failure by the Department of Finance to fully establish the nature and level of resources it would require to carry out its statutory functions". I accept that was a valid and an objective criticism by the Committee of Public Accounts. I also accept that there is a good response at this point to deal with the issue because the lack of resources was a key issue.

We had detailed discussions at the Committee of Public Accounts, as the Minister of State's officials will know. The failure in the Department of Finance - it is a cross-government issue - arises from the fact that when a new body is set up, the amount of money spent will increase. It will attract more appeals, but that fact was not fully factored in in considering the workload of the Tax Appeals Commission. However, at this stage we are happy to see additional resources being provided. There was criticism and extra commissioners have been sanctioned. The commission stated it was not given the back-up and technical staff required to do its work. I hope that issue has been addressed and that the Minister of State will say staffing levels have been increased. I again say the approved number of employees last year was 18 and that the approved number this year is 33. I do not know what the current figure is, but that is an indication that we are beginning to get it right, which is important. It is good to report progress where it is seen.

That leads me to the question of the backlog and the arrears of tax in dispute. That is on what I want to concentrate in the few minutes available to me. It was made clear to us that the amount in dispute at the end of 2017 was about €1.6 billion. We were concerned that excessive delays in finalising appeals caused by inadequate resources might - I do not know what the definite position is - result in the imposition of additional interest charges on unsuccessful appellants. That would potentially be a factor if they were to be unsuccessful and delayed excessively. As I cannot say this definitively, perhaps it might be clarified on Committee Stage whether extra interest was charged during the appeals process or if the clock was stopped. I would be equally worried if the clock was stopped on extra interest in cases under appeal if somebody felt it was possible to lodge an appeal to stop the clock on extra interest for a couple of years. I am not expressing a view, but on Committee Stage I would like the Minister of State to set out the position for the information of the public, the House, practitioners and taxpayers in general.

We move on to the situation where the Tax Appeals Commission had to move to new offices during the process. There was some argy-bargy between the Office of Public Works, OPW, and the commission at the Committee of Public Accounts. We will not go there, but I will just say it was unseemly at the time. Perhaps it is good that we got under the bonnet to see what happens when the OPW moves people. It moved people from the Department of Health and the lesson is that the Departments of Finance and Public Expenditure and Reform do not do everything as well as everybody seems to think they do. That is all I will say about the matter. When one looks at any example where it moves a big office from one location to another, there are a lot of problems left in its wake that should have been foreseeable. Let us hope that is all history at this stage. We want to move on in a positive way and see the new chairperson appointed as soon as possible.

When the commission took over legacy appeals from the Revenue Commissioners, we were told at the Committee of Public Accounts that approximately 2,000 cases were already in the system. A significant number had come through from Revenue and they were not being dealt with. We were told at the meeting of the Committee of Public Accounts in July 2018 that there were 5,622 appeals related to 2,505 appellants in process. The Minister of State might clarify the number for information before Committee Stage. I ask him to separate the number of appeals from appellants when he is discussing the matter because there could be an appellant with multiple appeals. People are not clear on what we are talking about when it comes to the numbers of appeals and appellants. There can be an overlap. I am reading from what was said at the Committee of Public Accounts, to which it would have responded in due course. I just wanted to clarify the matter.

Another issue that I am at pains to point out - it is probably in the interests of the Department of Finance that it be pointed out - is that at that stage the tax arrears in dispute were approximately €1.8 billion, but the outstanding liabilities were approximately €1.3 billion. Therefore, the point is that some companies made their payments in advance, but the matter of whether they should have paid it was in dispute. It was really an issue of overpaid tax being in dispute. The value of the cases amounted to €1.8 billion, but that was not the estimated amount of tax outstanding. Some of the appeals, if successful, would result in refunds because of previous overpayments. They are not quite the same.

I move to what I call some of the high value cases. This issue is not dealt with in the legislation.

I ask the Departments of Finance and Justice and Equality to work on the number of high value appeals going to court. While those cases are on the Tax Appeals Commission's books, in a way its hands are tied.

The Committee of Public Accounts wants to ensure we are collecting the tax due to the State in order that we can pay for public services because it is taxpayers' money. The committee was told by the Tax Appeals Commission that in 2018 three cases involving over €100 million were in dispute, as were 14 cases involving a sum in excess of €10 million. I want to outline the information we received at the committee, which was correct as of 11 July. We asked for information on the ten largest cases, because that is where the big money is. We never asked about the category of industry or the types of taxpayer involved. We only asked about the category of taxation. Of the ten largest cases, nine relate to corporation tax, while one is in respect of an environmental levy. The Tax Appeals Commission gave us that information during the summer recess. There are three cases in which the outstanding amount in dispute is between €30 million and €50 million, which combined could be up to €150 million. In four cases the amount in dispute is between €50 million and €100 million, which potentially could add up to €400 million. There are a further three cases where the amount in dispute is in excess of €100 million. The estimated value of these three cases, based on the information presented to the Committee of Public Accounts, is €2 billion. There are ten cases where the estimated amount in dispute is €2.5 billion. We have asked for a progress report on these cases. I again stress that we do not identify the companies or the category of industry as it could help to identify them.

In two of the biggest cases the appeal is not sufficiently advanced to give us a timeline for when the cases might be dealt with. In one case the High Court has imposed a stay on progressing the appeal, pending the outcome of judicial review proceedings. I do not know which three cases they are, but we have seen a pattern of cases going to court. I am worried that we will see billions of euro being tied up in the courts and that the Tax Appeals Commission will not be able to deal with them because they have been referred to court. These are cases in which there have been no payments to date. I ask the Minister of State to talk to his colleagues in the Department of Justice and Equality in the interests of taxpayers. If cases involving a sum of over €100 million, or even much lower figures, are being held up in the courts, we need a mechanism to deal with them speedily. If money is due, it should be paid. The courts system must expedite these cases in order that we can have early conclusions one way or the other and provide certainty for taxpayers and the public. The large amount of money has crept up from €1.5 billion to over €3 billion and I do not want to see it escalating further.

All in all, we welcome the legislation, which is good and important. However, we have to watch the big cases that are building up.

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