Seanad debates

Wednesday, 16 December 2015

Finance (Tax Appeals) Bill 2015: Second Stage


Question proposed: "That the Bill be now read a Second Time."

10:30 am

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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The purpose of this Bill is to provide for reforms of the role, functions and structure of the Office of the Appeal Commissioner and the tax appeals system. The overall objective is to ensure an enhanced and cost-effective appeal mechanism for tax cases, while providing transparency and increased certainty for taxpayers. The Appeal Commissioners are responsible for carrying out the statutory duties assigned to them under the Taxes Consolidation Act 1997 and related legislation, principally the hearing of appeals by taxpayers against decisions of the Revenue Commissioners concerning taxes and duties. The commissioners hear appeals relating not only to income tax, but also to corporation tax, value added tax or VAT, capital gains tax, stamp duties, capital acquisitions tax, customs and excise duties, vehicle registration tax and local property tax. Most appeals relate to the amount of an appellant's tax liability.

As is appropriate for an administrative tribunal, the Appeal Commissioners are independent in carrying out their functions. I acknowledge the valuable role the commissioners play in the operation of a fair and efficient taxation system. Mr. Ronan Kelly recently retired as an Appeal Commissioner, having served in that role for over 20 years. I understand the term of the other commissioner of long standing, Mr. John O'Callaghan, will end in a few days. On behalf of the Minister, Deputy Noonan, I thank both for their diligent service since the early 1990s. I am pleased that, following an open competition conducted by the Public Appointments Service, Mr. Mark O'Mahony took up his post as Appeal Commissioner on 9 November last. Ms Lorna Gallagher will commence as Appeal Commissioner in the next few days. I look forward to both playing a central role in the reform of the appeals system and I wish both well in their work.

Our tax appeal system has been examined over the years and the following reports and tribunals have made recommendations about the Appeal Commissioners in that time: the steering group on the Revenue Commissioners; the Dáil Committee of Public Accounts final report on the DIRT inquiry; the Revenue powers group report; the Law Reform Commission report on a fiscal prosecutor and a revenue court; and the Commission on Taxation report. Proposals for changes to the appeals system have been made by stakeholders, including the professional representative bodies, such as the Irish Tax Institute and the accountancy bodies.

The Minister announced in budget 2014 his intention to instigate a reform of the appeal system for tax matters, including reform of the role, functions and structure of the Office of the Appeal Commissioner. This Bill represents the culmination of a process that involved constructive dialogue with stakeholders on the oversight and operation of the tax appeals system towards a common objective of reform to enhance the system for all participants.

The reforms proposed will bring appeals through the initial stage in a more streamlined fashion, with enhanced case management procedures to facilitate a more efficient and structured flow of appeals. The proposed reforms in the Bill will end the practice of appeals being made via the Revenue Commissioners and will involve a significant change to the process for appeals by way of the "case stated" procedure for the High Court, and the removal of the Circuit Court rehearing stage of the appeal process. This issue was the subject of much debate in the other House and I expect it to be the subject of some debate in the Seanad. The Minister remains convinced that, with the strengthening of the roles and procedures for the Tax Appeals Commission and given trends in relation to other expert administrative tribunals, retention of the Circuit Court stage of the appeals process would be anomalous. Opportunities for redress also exist in certain circumstances by way of judicial review and appeal to the Court of Justice of the European Union.

In accordance with the agreed protocol for pre-legislative scrutiny by Oireachtas committees, the heads of Bill were sent to the Joint Committee on Finance, Public Expenditure and Reform, which issued its report on 16 April last. Following consideration of the report of the joint committee and concerns expressed by stakeholders prior to and during the pre-legislative scrutiny process, the Minister decided to change the provisions in the heads of Bill regarding public hearings of tax appeal cases. The heads had envisaged that hearings before the Appeal Commissioners, heretofore held privately orin camera, would in future he held in public session following enactment of the legislation. While the default position will still be for public hearings, the Bill has been drafted to provide that where an appellant requests it, the hearing of his or her tax appeal will be held in private. I consider that this provision will meet the concerns of the committee and stakeholders, although I appreciate that diverse views were expressed. The committee considered that transparency, which had been one of the objectives of the original public hearings proposals, would be enhanced and clarity provided to taxpayers and the general public if all hearings were accompanied by written determinations, as is proposed.

The key elements of the Bill are as follows: the establishment and structure of the commission; the appointment and removal process for Appeal Commissioners; the terms and conditions of Appeal Commissioners; the provisions for staffing and funding of the commission and its accountability; a new Part 40A of the Taxes Consolidation Act 1997, providing for a wide range of amendments to the legislation governing appeals in regard to the various taxes under the care and management of the Revenue Commissioners; and a schedule of consequential amendments to the various tax and duty Acts arising from reform measures and from the effect of the new Part 40A. The main thrust of the reform is to strengthen the independence, and the perceived independence, of the Appeal Commissioners. The measures to achieve this contained in the Bill include appropriate selection and appointment provisions involving the Public Appointments Service, fixed-term appointments, a clear statutory statement of independence, new funding and staffing arrangements and the making of appeals directly to the Appeal Commissioners, and not Revenue, as currently happens.

The Bill is in five Parts and has two Schedules. I will outline the provisions of Part 2 in some detail. As the provisions of the subsequent sections are extensive and complex, I will give an overview of their essential components. I am aware that Members of the Seanad may wish to address some specific issues on Committee and later Stages.

Part 1 is preliminary and general. It contains standard provisions comprising the Short Title and commencement provisions, together with interpretations and definitions for the Bill.

Part 2 contains provisions relating to the establishment of the tax appeals commission, its membership and functions and the appointment, terms and conditions of the individual Appeal Commissioners and their staff.The more important of these provisions are described as follows.

Section 6 sets out the functions of the Appeal Commissioners with regard to the acceptance, refusal, adjudication and determination of appeals, the conduct of hearings, the provision and publication of determinations, the stating and signing of cases for the High Court and the establishment of efficient and effective systems and procedures for the processing of appeals. The commissioners are required to conduct appeal proceedings in a way that is accessible and fair and as expeditious as possible. The functions of the commissioners can be performed by any one of them acting individually, unless they have provided otherwise in their rules of procedure.

Section 8 deals with the appointment of Appeal Commissioners. The Minister is required to have the Public Appointments Service assess and select candidates for appointment as commissioners and to recommend suitable candidates to the Minister. The Minister is given powers to specify requirements with which candidates must comply, such as practical experience or academic qualifications. The Minister is permitted to appoint a serving commissioner for a second term, without recourse to the Public Appointments Service, where the commissioner’s first term of office has expired. A commissioner is precluded from serving for more than two consecutive seven-year terms.

Section 9 provides for temporary commissioners in cases where the full-time commissioners have recused themselves. In such cases, the Minister can appoint a Circuit Court judge as a temporary commissioner. The Minister can also appoint a person as a temporary commissioner in non-recusal situations where circumstances require such an appointment, for example, in a situation where there has been a significant increase in appeals and a temporary commissioner is required to help deal with it. Section 10 establishes the independence of the tax appeals commission and its Appeal Commissioners in the performance of their functions. Section 13 provides that the term of office of Appeal Commissioners will be seven years, with scope for the Minister for Finance to reappoint a commissioner for a second and final seven-year term. Section 17 provides for the Minister’s powers to remove commissioners from office for stated reasons, subject to the Minister laying a statement before the Dáil giving the reasons for any such removal.

Section 18 provides for the cessation of a commissioner’s tenure where she or he is adjudicated a bankrupt, makes a composition or arrangement with creditors, is convicted of an offence or ceases to be ordinarily resident in the State. The section also provides for the cessation of a commissioner’s tenure on his or her nomination or election to various public offices such as the Oireachtas, a local authority or the European Parliament. Section 19 provides for the funding of the commission to be as determined by the Minister for Public Expenditure and Reform. Section 20 provides that staff numbers of the tax appeals commission are to be determined by the Ministers for Finance and Public Expenditure and Reform. Section 21 requires the Appeal Commissioners to submit annual reports to the Minister for Finance, who will lay them before the Houses of the Oireachtas. These reports are to contain specified statistical information with regard to appeals where this is required by the Minister or by any enactment. The commissioners also will be able to report to the Minister on other matters as they consider appropriate. The Minister may require the commissioners to report on various matters but this is subject to the commissioners not being required to include information on matters that would prejudice the performance of their functions.

Part 3 provides for the treatment of existing appeals when the new appeal process comes into operation. It contains provisions relating to the arrangements for transitioning from the old appeal process to the new model. On the commencement date for the new appeal process, appeals already will have been made and will be at various stages of the old appeal process. Many of the steps in the old appeal process will continue under the new process. The general rule is that existing appeals will move on to the next stage in the process. Thus, for example, appeals that have already been made to Revenue will be transferred to the Appeal Commissioners and the revised case stated procedure for appeals to the High Court will apply to Appeal Commissioners’ determinations made after the commencement date. However, there are exceptions to this general rule, for example, a taxpayer whose appeal has been heard but not determined still will be entitled to a rehearing before a Circuit Court judge, should he or she lose the appeal. There also are provisions to allow a different Appeal Commissioner to finalise an appeal in circumstances where the Appeal Commissioner who started the adjudication is unable to so do for reasons such as retirement.

Part 4 concerns the insertion into the Taxes Consolidation Act 1997 of a new Part 40A, which deals with appeals to the Appeal Commissioners. Part 40A contains provisions relating to the entire appeal process and to the appeal commissioner's conduct and management of that process, commencing with the making of appeals and their acceptance or refusal, progressing to adjudication, hearing, determination and publication of determinations and finishing with appeals to the courts against determinations of Appeal Commissioners. It facilitates a more active case management approach by the Appeal Commissioners. In straightforward cases, they will not be required to hold a hearing but can adjudicate and determine the appeal based on paper submissions, subject to the agreement of the taxpayer to this approach. The Appeal Commissioners will be able to dismiss appeals where the taxpayer does not co-operate with them by, for example, providing information such as accounts requested by the commissioners. Responsibility for the preparation of a case stated for an appeal to the High Court, subject to a time limit, is being given to the Appeal Commissioners themselves instead of the parties to the appeal. Increased transparency and certainty will result from the requirement that all Appeal Commissioners' determinations must be published. Part 40A contains provisions relating to whether a hearing, or part of a hearing, is to be held in public or in private. As I outlined already, the default position is that all hearings are to be held in public, subject to exceptions relating to, for example, issues involving public order or sensitive issues. However, the Appeal Commissioners must hold a private hearing or a part-private hearing where an appellant submits a request for this. As I indicated earlier, this represents a change from the original proposed provisions following the views expressed during pre-legislative scrutiny and by many stakeholders.

Part 5 contains amendments to 137 separate sections and Schedules in the Taxes Consolidation Act 1997. A consequence of the changes being made to the appeal process is the need to make a large number of consequential amendments to provisions relating to appeals in the Taxes Consolidation Act 1997 and in various other taxation Acts contained in Schedule 2. While there are a large number of individual amendments, given they are being made with regard to several different types of taxes and affect a wide range of provisions, most of them are of a similar nature. For this reason, each individual amendment is not explained. The most common amendment is that necessitated by the fact that under the reformed system, a taxpayer will be obliged to appeal directly to the Appeal Commissioners and not via Revenue, as currently happens. Various cross-references that no longer are relevant are being removed such as, for example, references to Part 40 of the Taxes Consolidation Act 1997, which is being phased out and replaced with the new Part 40A.

Another type of amendment will clarify and make more explicit a right of appeal that is currently only implicitly stated in the various tax and duty Acts. A valid appeal under the revised appeal process will require a specific right of appeal to be given in the relevant tax and duty Act. The opportunity presented by the reform of the appeal process is being taken to rectify any anomalies and inconsistencies that currently exist and to standardise as far as possible the appeal provisions for the various taxes and duties. One example of such standardisation relates to the number of days allowed for the making of an appeal. While 30 days is the usual time limit, this has not been standard across all of the taxes and duties. Another example is the alignment of the preconditions for the making of an appeal against different types of Revenue assessments such as, for example, the requirement to have submitted outstanding returns to Revenue and to have paid the part of the tax liability not in dispute before an appeal can be made.

The origins of the Appeal Commissioners date back to the Act of Excise 1662 and thus it is a body that predates the foundation of the State. At present, the Minister for Finance appoints Appeal Commissioners pursuant to section 850 of the Taxes Consolidation Act 1997. Effectively, the Minister has had discretion as to who was appointed and on what terms, subject only to laying details of the appointment before the Houses of the Oireachtas. This Bill proposes to change this by requiring that appointments will be made by the Minister only following an open competition run by the Public Appointments Service.

The role of the Appeal Commissioners is to act as an independent administrative tribunal in adjudicating disputes between taxpayers and the Revenue Commissioners. This Bill is designed to enhance the independence of the Appeal Commissioners, increase transparency and provide a more efficient appeal system in tax disputes to the benefit of compliant taxpayers and the Exchequer alike. I commend this Bill to the House.

Photo of Darragh O'BrienDarragh O'Brien (Fianna Fail)
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I thank the Minister of State for outlining the provisions of this Bill. The single fact that will shock people is the Revenue Commissioners sometimes get things wrong. In response to a question tabled by Fianna Fáil's finance spokesperson in the Dáil, Deputy Michael McGrath, it was revealed that in approximately 26% of cases, appeals were decided in favour of the taxpayer. This demonstrates there is a requirement for an appeal mechanism. Fianna Fáil welcomes this Bill because it will update and modernise the appeal system. The Minister of State has outlined from where this derives and it effectively dates back to the 17th century. All Members seek to have this process modernised, particularly when one considers the delays in processing some appeals. While there may be some valid reasons, more than 600 appeals have been pending for more than five years and 30 appeals have been pending for more than ten years. Such figures and instances certainly means the system should be streamlined. It will help greatly that decisions will be made within 90 days and will be published in public via the Internet. I certainly welcome this because other potential appellants will be able to see on the public record how other appeals were heard and how they were found. This then could lead to someone deciding whether to take an appeal in certain instances and this is to be welcomed.It was mentioned in the Dáil, and I repeat it here, that removing the option to appeal to the Circuit Court is a concern, but it does not mean we will not support the Bill. We will support the Bill, but the appeal issue should be looked at again. By removing the option to appeal to the Circuit Court, the only appeal would be on a point of law. Anyone going into court to argue a specific point of law knows that it remains on that item alone. I am not sure why that appeal option has been removed and I cannot see the reason in the Minister of State's speech. Perhaps he could address that specific issue in his response to the House and it may be possible to have this reviewed next year to see how it works. I will not detain the House. Fianna Fáil supports the Bill but once it is in place, the historical appeals should be tracked and a review held into how the backlog is to be tackled. It can then be established if the target of 90 days is being reached in which appeals are heard and decided on.

I welcome the Minister of State's comments that any future appointments would be made through the Public Appointments Service, PAS, an open process, and ratified by the Minister. The positions will still be decided by the Minister but through the PAS, which is an important step forward. The Circuit Court concern is the one point on which Fianna Fáil would want further consideration. We support the Bill, it is very welcome and it will make a difference to many people. There are instances where over 25% of appeals have been found in favour of the taxpayer, which shows the importance of having an appeals system. It is hoped this legislation will allow a more streamlined and efficient approach.

Photo of Michael D'ArcyMichael D'Arcy (Fine Gael)
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I welcome the Bill which has been a long time coming. In 1662 Cromwell was not long gone from Wexford after he sacked it in 1649. This Bill should have been brought forward much earlier. The Revenue Commissioners are very good at their job, but as Senator O'Brien has said, on occasion they do get things wrong. Over 25% of appeals were overturned by Revenue itself. When people are appealing to an independent and objective office rather than going back to Revenue, perhaps the expectation is that even more cases may be overturned or more will be taken to appeal. The 26% figure could be higher but we will never know because we do not know how many people would be more likely to take an appeal when they can go to an independent office.

I welcome the matter of the appeals being made public but there are concerns around tax matters being private until they are concluded. If Revenue finds that somebody has done something wrong, perhaps unintentionally, and there is a finding against somebody, penalties and charges apply. However, in the number of appealed cases which were found to be correct, where the taxpayer is found to have done nothing wrong or where the case had gone against Revenue, I am sure some people would not like that information put out there. It is a space we need to consider. I understand there is an option for the appeal to be held in private. I would appreciate it if the Minister of State could clarify this matter further.

The target of 90 days in which to make findings on appeals is welcome. A person may have a bill from Revenue and the clock is ticking. If the matter is dealt with within 90 days, whether it is in favour or against, at least the clock is no longer ticking and the person has their determination of what is due or not.

I welcome the transparency around the appointment of people to these important commissions, now and in the future, via the Public Appointments Service. The way things were done, where a person got a job because they were a friend of or knew someone, was not good practice That is old hat from an older era that no longer has a place in society. I am broadly supportive of this proposal. I was a bit surprised to see the Act went back to 1662.

Photo of Feargal QuinnFeargal Quinn (Independent)
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I welcome the Minister of State to the House. I welcome the Bill and I hope it means that customers, that is, citizens, will benefit from a more transparent and efficient tax system. However, there are a few issues, one of which was raised by Senator O'Brien. The removal of the right to appeal to the Circuit Court is one of the more contentious parts of the legislation. For instance, sections 35, 36 and 38 delete references in the 1997 Act where a party can make an appeal to the Circuit Court. Unfortunately, amendments in the Dáil on Committee Stage to reintroduce the possibility of appeals to the Circuit Court were not accepted. These amendments also included a proposal to allow a party who wanted to appeal to the Circuit Court regarding a determination by the new tax appeals commission. The references to the Circuit Court should be retained to give people another option for redress. The Circuit Court would also give people a viable and reasonable option for appeal if they were not satisfied. The appeal to the Circuit Court would not always happen but it is a safeguard in place if a person is not happy with a determination of the appeals commission. The massive costs associated with going to the High Court mean that it is not a reasonable option for many people. It must be remembered that people have to appeal on a point of law rather on their own case per se. If the legislation is passed as it stands, it will simply stop many people from appealing and I hope that is not the intention of the legislation. It am sure it is not the intention but it may be the end result.

There is much concern about removing the possibility of the Circuit Court even getting involved in these matters. This is not about clogging up the courts system but about retaining checks and balances. It is about allowing the largest number of people to access redress, which is something the Circuit Court could provide given that the High Court is not a practical option. We know that cases can be very complex and having the Circuit Court as a backup is very worthwhile. One of the members of the Select Sub-Committee on Finance, Deputy Pearse Doherty, said "This is one of the areas in which there was no division among committee members on the question that the right of appeal to the Circuit Court should be maintained". The Government should take that opinion on board. If having the reference to the Circuit Court in the legislation helps just 1% of cases, then it is worth reinstating it into the legislation. I would support this and would appreciate a response from the Minister of State on these concerns.

The Bill provides for the online publication of determinations. Is it envisaged that customers would in future lodge their appeals online? Section 949C, inserted by section 34 of the Bill, covers appeals to the appeals commission via electronic means. Subsection (3) says, "The Revenue Commissioners and the Appeal Commissioners may each, in their discretion, put arrangements in place for, or approve, the use of electronic means for any purpose of this section." I do not think it is good enough in this day and age to leave it to the discretion of Revenue and the appeals commission if they want to introduce an online appeals system. Will the Minster of State consider amending this section to compel Revenue and the appeals commission to introduce an online appeals system within one year on the Bill coming into force? I believe that is what the customer and citizen wants. Substantial work has been done on the Bill and yet this very obvious target has been deliberately left ambiguous. An amendment should be included in the legislation to provide for the introduction of a set date by which the appeals commission would implement an online appeals system. It is a vital aspect if the Government is serious about providing an improved tax appeals system. Is there a target date for responses to the customer? Our current system is overloaded and I would like to see a response time being set in order that the efficiency of the current system could be improved. Perhaps the Minister of State could comment on these areas.

The Bill is about improving the overall tax system in the State and a good effort has been made, but it could be argued that we had a setback in the past year. In its Doing Business 2016, the World Bank reported on Ireland's system.It states, "Ireland made paying taxes more costly and complicated for companies by increasing landfill levies and by requiring additional financial statements to be submitted with the income tax return." This report, which is one of the most important in comparing conditions for doing business worldwide, indicates that we are imposing more red tape on business. Will the Minister of State address this concern, particularly in respect of the increased paperwork imposed on companies in the past year as a result of the requirement to provide additional financial statements with their income tax returns?

On vehicle registration tax, section 2 outlines the various taxes the new system will cover, including income tax and the local property tax. It states the Act will also cover, "any instrument made thereunder and any instrument that is made under any other enactment and which relates to tax", including in respect of stamp duties and of duties related to Customs and Excise. Will the Minister of State confirm that the legislation will cover vehicle registration tax, VRT, which is one of the most contentious taxes? When people import a car the rate of vehicle registration tax is determined based on the so-called open market selling price. Revenue purportedly arrives at a figure by comparing similar models of vehicles. However, this method is highly unscientific when the model is rare or obscure. While this may not affect a large number of vehicles, these types of cases certainly arise and the system has caused much public satisfaction. In the interests of customers, it would be useful if the open market selling price arrived at by Revenue could be appealed.

These are only some of my thoughts on the Bill. I am particularly concerned that Ireland has slipped back from 17th to 23rd place in the rankings of the best places to do business, especially as the Taoiseach's objective is to make the country the best small country in which to do business.

Photo of Aideen HaydenAideen Hayden (Labour)
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I broadly welcome the Finance (Tax Appeals) Bill 2015. As a member of the Joint Committee on Finance, Public Expenditure and Reform, I was involved in the pre-legislative scrutiny of the legislation. I am pleased, therefore, that a number of the issues about which members of the joint committee raised concerns have been addressed in the drafting of the Bill. The pre-legislative scrutiny process has proved a useful way of evaluating a proposed change to the tax code that is perhaps more fundamental than people realise.

I have been struck by a number of issues and it may be useful to place them on record. The joint committee met one of the Appeals Commissioners. Members were struck by how effective the current appeals process is and the incredible work that is done by a team of four people, consisting of two Appeals Commissioners and two members of staff. I understand the annual cost of the Office of the Appeals Commissioners is €447,000 per annum. The service the office provides to the general public is highly successful.

One of the issues that arises in the context of the legislation is transparency in the tax code. In an international context, transparency is highly desirable, particular for those who want to do business here, as they will seek clarity and transparency around the tax code. No one disputes the need for transparency. One of the proposed changes was to have all appeals heard in public. A number of stakeholders and members of the joint committee raised concerns about this proposal. The first of these was that Ireland is a small country. While a number of members indicated we should align the system with those in place in larger countries such as the United States and Canada, a number of other stakeholders pointed out that in a country with such a small population - there are only approximately 5 million people on the island as a whole - having all appeals against Revenue decisions heard in public would have a negative effect in terms of achieving the desired outcome of bringing about the level of engagement that people should have with the tax system and the transparency desired. I am pleased this concern has been addressed in the Bill. I understand the Revenue Commissioners agreed that public hearings could act as a disincentive to people considering lodging an appeal against a Revenue decision. The provision that private information related to the family should not be brought into the public domain solely on the basis that a person wants to appeal a decision of the Revenue Commissioners is a positive step.

The fundamental change the Bill makes is that all appeals will be held in public, except where a person requires that an appeal be held in private. Under the current system, all appeals are heard in private. One of the criticisms made of the current position was the lack of transparency arising from the failure to report decisions, in other words, the failure to record them on the website of the Office of the Appeals Commissioners. From memory, the Appeals Commissioners responded to this criticism by pointing out that the service has four staff with which to deal with 400 cases per annum. They indicated that they could place all the necessary information on any website if they had more resources. It is important to bear this in mind when we decide to throw the baby out with the bath water. Sometimes we need to be conscious that systems may work more effectively without the introduction of fundamental changes.

I am disappointed that one or two of the recommendations made by the joint committee have not taken on board. The first of these was the recommendation not to remove the role of the Circuit Court as a court of appeal. This recommendation should be noted for the record. I understand one of the reasons it was not accepted was that, as the law stands, the Revenue Commissioners cannot appeal certain cases. I believe they can only appeal cases involving capital gains tax to the Circuit Court and cannot appeal under any other circumstances.

I wonder why the Bill does not simply allow the Revenue Commissioners the right to appeal to the Circuit Court. I am conscious that a number of the stakeholders were aware that having to go to the High Court in a case stated is a much more expensive procedure than taking an appeal to the Circuit Court. On the other hand, I accept that introducing an appeal to the Circuit Court delays the process and makes it less speedy and perhaps less effective because, as was made clear by the Appeals Commissioners, the level of detail required to hear some of these complicated tax cases requires extensive knowledge of the tax code, which is not necessarily available at Circuit Court level. I found this argument persuasive.

A number of the improvements made also remove the necessity to go to the Circuit Court. One relates to the fact that decisions can effectively be heard at a pre-hearing stage. The Bill introduces - if not in fact, then certainly in practice - a pre-hearing stage to the Appeals Commission phase of the process. This is a positive development. On balance, while the joint committee recommended that the Circuit Court stage of a tax appeal be retained, I am not persuaded that it was completely correct in that respect. Having read the legislation in more detail, I do not believe the Bill would have been improved by retaining the role of the Circuit Court.

As I am under time pressure, I will raise other matters on Committee Stage.

Photo of Catherine NooneCatherine Noone (Fine Gael)
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All Stages are being taken today.

Photo of Aideen HaydenAideen Hayden (Labour)
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I am aware of that. The engagement between all stakeholders was good and demonstrated the positive impact of pre-legislative scrutiny. This process could be useful in many more areas of legislation.

Photo of Kathryn ReillyKathryn Reilly (Sinn Fein)
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I will briefly pick up on Senator Hayden's concluding point in which she welcomed the pre-legislative scrutiny process. Scrutiny of all aspects of public policy is needed and we should engage in the process to the best of our abilities. I welcome the Bill, which Sinn Féin will support.

While many members of the public will not be familiar with the work of the Appeals Commissioners, it is an important office.My party's approach to this Bill, as during pre-legislative scrutiny, is to ensure transparency and fairness in the appeals system open to citizens when dealing with their tax affairs. After much debate, my party still believes that this Bill should be improved in two ways, one of which was mentioned here earlier.

The first issue is the removal of private hearings in the appeals process. It has been mentioned here a good deal. I am aware that during the pre-legislative scrutiny process many stakeholders expressed views on that and that, in itself, brought about the changes in relation to the hearings. We are told that as a rule, hearings will be in public but the reality is that by giving an opt-out few, if any, will opt for a public hearing. This could be seen as a step backwards and a climbdown on one of the core issues of this reform. My party has tabled amendments on this issue but I will speak to it here this afternoon, and I know the Minister of State will come back to it.

All hearings will be accompanied by written determinations but I do not know whether this, in itself, will be sufficient. It is a good Bill but this issue might be seen as a weakness. It is often said that not only must justice be done; it must also be seen to be done. Senator Hayden reflected on some of the concerns on this during pre-legislative scrutiny. I was not a member of the committee involved and some of these issues were new to me. It would be good to hear in the House the Minister of State reflect on the debate that occurred during pre-legislative scrutiny and why the Department agreed to change the draft heads of the Bill.

The second key issue my party would have relates back to what other Senators were talking about, namely, the removal of the right of appeal to the Circuit Court. The Government is sticking to its guns here on this issue and going against the members of the committee who sought that the right of appeal to the Circuit Court be maintained. Like other Senators, I would ask the Minister to reconsider this.

There is a pattern to remove the right of access to the Circuit Court for citizens. We have seen this in the Customs Act 2015 which was recently passed and in the Financial Services Ombudsman process. The idea that persons abuse the appeal system would not stand up to scrutiny. The Minister will say this is the way it is for other State bodies, but that does not make it right and that is not the issue before us. The question has to be whether we want citizens to be able to have their day in court or whether it is to be made more difficult and only available in certain circumstances. For example, I note Senator Quinn mentioned the issue of only being able to appeal on a point of law. That is an important consideration.

There is a lot to be welcomed in this legislation. A more transparent system with decisions recorded systematically for the first time is a positive move. The idea of a record of decision to provide guidance is clearly sensible.

As I stated, my party will support this Bill. We have tabled some amendments. However, I think the issues have been thrashed out on Second Stage. As I stated, I would like it if the Minister of State could respond to the issues about the pre-legislative scrutiny and the issue of the public versus private hearings.

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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I sincerely thank the Senators who contributed to this debate and, indeed, for the broad welcome that all Senators have given to this reforming legislation.

The reform of the tax appeal system will bring positive reform of the role, the functions and the structure of the Office of the Appeals Commissioner and of the tax appeals system. It will serve a dual function: first, in providing transparency and increased certainty for taxpayers; and, second, bringing about an enhanced and cost-effective appeal mechanism for taxpayers and for the Exchequer. It is timely to proceed with this reform process which will see appeals being brought through the initial stages in a more streamlined fashion with enhanced case management procedures to facilitate a more efficient and structured flow of appeals.

In my opening speech, I have already gone through the improvements and the various sections of the Bill and in the time available to me, I will focus on the two issues of concern that have been raised during Second Stage, on which there are Committee Stage amendments from Senator Reilly.

In relation to the hearings in public, I share the view that the pre-legislative scrutiny stage was valid and helpful in teasing out and discussing a number of issues and hearing from stakeholders. The Senator is correct that the Minister, Deputy Noonan, when he originally published this Bill, envisaged a situation whereby all appeals would be in public. However, there were, I will accept, diverse but strong views at the committee on the unintended negative consequences this could have. Senators Hayden and Michael D'Arcy articulated them. This is a small country. We do not want to have an appeals system that would in any way discourage persons from their right of appealing a decision of the Revenue Commissioners and while the default position in the legislation will be for public hearings, on application by an appellant for a hearing or part of a hearing to be held in private, that will be granted. That is the balance the Minister is trying to achieve in this legislation. He believes and I believe that this will meet the concerns of stakeholders, particularly as voiced by a number of Members of the Houses at pre-legislative stage on behalf of small business people. For example, small shopkeepers could find themselves in a public hearing with their customers in attendance, with material from the hearing being reported locally, and such publicity could undermine their business even if the appeal was upheld. It is a balance we are trying to achieve here. The publication of determinations will be valid and important in terms of increased transparency.

In relation to the issue of the Circuit Court, I refer Senators to a Supreme Court judgment in 1997 in the case Henry Denny and Sons (Ireland) Limited v. the Minister for Social Welfare. It is a particularly relevant quote which I wish to put on the record of the House. It states:

I believe it would be desirable to take this opportunity of expressing the view that the courts should be slow to interfere with the decisions of expert administrative tribunals. Where conclusions are based upon an identifiable error of law or an unsustainable finding of fact by a tribunal such conclusions must be corrected. Otherwise, it should be recognised that tribunals which have been given statutory tasks to perform and exercise their functions, as is now usually the case, with a high degree of expertise and provide coherent and balanced judgments on the evidence and arguments heard by them it should not be necessary for the courts to review their decisions by way of appeal or judicial review.

This is a message from the courts, one might argue, to the Oireachtas about the role of expert administrative tribunals. What we are trying to do in this legislation is further ensure that taxpayers, when they take an appeal, have an opportunity to appeal to an independent expert administrative tribunal that will have a level of expertise, with no disrespect to the courts, that the Circuit Court itself would not profess to necessarily have in tax matters.

I take the point that Senator Hayden raised in relation to cost and the cost of a High Court hearing obviously being more than the cost of a Circuit Court hearing. While some of the costs that I have heard bandied about in other parts of this debate are not quite accurate, I appreciate that the high cost may be a barrier to participation but it must be pointed out that even if we were to retain the Circuit Court stage, it would remain open to the Revenue Commissioners to appeal the Circuit Court stage, if they lost, to the High Court, and the idea that the taxpayer may not find himself or herself in the High Court does not really stand up to scrutiny in that regard as well.

The intention of this Bill is to produce reforms which will ensure a more robust, transparent and streamlined tax appeal procedure. In my view, a route of appeal from the reformed Appeal Commissioners stage to the Circuit Court does not make sense and it is not one that the Minister could stand over. The Appeal Commissioners are the specialist expert tax tribunal and the Minister is determined that this status be acknowledged and, where possible, even strengthened.

Furthermore, the current tax appeals process is out of step with the procedures of other expert appellant tribunals. Some examples of decisions made by public bodies that can be appealed only by way of an appeal to the High Court on points of law are decisions made by An Bord Pleanála, the Financial Services Ombudsman, the Information Commissioner, the Irish Financial Services Appeals Tribunal, the Labour Court, the Refugee Appeals Tribunal, the Rent Tribunal, the Social Welfare Appeals Office, the Tenancy Tribunal of the Private Residential Tenancies Board, the Valuation Tribunal in respect of commercial rates and the Workplace Relations Commission, WRC, where unfair dismissal cases were appealable from the Employment Appeals Tribunal to the Circuit Court but this, too, has now ceased following the WRC's recent establishment. The Houses have considered these issues on many occasions and, I would contend, have favoured establishing the expert independent administrative route to a tribunal rather than the Circuit Court route. I hope I am explaining, even though we may not fully agree on this, the rationale behind our thinking in that regard.

In the interests of absolute clarity, I need to point out that the 90 days that have been referred to throughout this Bill is not a target for processing an appeal. The 90-day time limit is for the publication of the determination after the Appeal Commissioner has made the determination. There is no time limit for processing appeals because each case will be different and the Appeal Commissioners have to be given the space to deal with issues based on the complexity.

On the point Senator Quinn made, I will certainly read that report. The Senator is correct that as we move into a recovering economy it is important that we keep our relentless pursuit of making this a good country in which to do business. I will certainly consider those recommendations and discuss them with colleagues.

The new commission will develop electronic case management systems. There may in time be greater facilities for dealing with claims online. It is certainly something I would like to see. In the interests of clarity, there is no specific requirement in the Bill to migrate all processes to electronic systems.

I am pleased with the broad welcome for the Bill by Senators. I thank the Senators who were involved in the pre-legislative stage and the officials from the Department of Finance and Revenue who have worked so hard on this legislation. I hope I have provided some clarity on the points of concern.

Question put and agreed to.