Richard Bruton (Dublin North Central, Fine Gael)
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Question 522: To ask the Minister for Finance his views on introducing a provision whereby persons who had failed to make a claim for a tax refund within four years could advance special reasons why they had not made the application in time and that the possibility of making the refund could be adjudicated by the Inspector or the Appeal Commissioners. [1176/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that the Finance Act 2003 put in place a package of measures relating to the repayment of overpaid tax. This took place against the background of a special report by the Ombudsman to the Oireachtas in November 2002 highlighting among other things the lack of a general scheme of interest on repayments. At the time there was no general statutory right to the repayment of overpaid tax nor was there any general entitlement to interest in respect of repayments. The new measures were also enacted against the background of a number of court decisions which, based on the "doctrine of unjust enrichment", had on a piecemeal case by case basis established a common law right to the repayment of tax with interest.

The Finance Act 2003 measures provided for a new general statutory right to the repayment of overpaid tax. They also provided for a 4 year time limit on the making of repayment claims. This was, however, balanced on the assessment side with a 4 year time limit on the raising of assessments and the making of enquiries by Revenue (except in cases of fraud or neglect). Finally, provision was made for the payment of interest on all repayments at an annual rate of slightly over 4%. During the course of the Finance Bill 2003 my predecessor indicated that the measures being put in place achieved the necessary balance between establishing a fair and uniform system for taxpayers while at the same time protecting the interests of the Exchequer. It also addressed the issue raised by the Ombudsman in respect of the need for a general scheme for the repayment of overpaid tax.

I am satisfied that the current arrangements continue to achieve the necessary balance between establishing a fair and uniform system for taxpayers while at the same time providing the necessary protection for the Exchequer.

Jimmy Deenihan (Kerry North, Fine Gael)
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Question 523: To ask the Minister for Finance his views on the fact that in the event of a taxpayer appealing his or her assessment to the Revenue Commissioners, the person potentially faces increased assessment or penalties; and if he will make a statement on the matter. [1177/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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An appeal against an assessment is settled either by (a) agreement between the Revenue Commissioners (Revenue) and the taxpayer or (b) a determination by the Appeal Commissioner(s).

In relation to cases settled by negotiation and agreement with Revenue, this generally involves compromise on both sides. It is only where agreement cannot be reached or if the person assessed so requests, that a formal assessment is appealed to the Appeal Commissioner(s). The Appeal Commissioners is the body, independent of the Government or any other entity, including the Revenue Commissioners, appointed to hear and determine tax and customs appeals. Their decision is final and conclusive unless the person assessed requests a rehearing in the Circuit Court or unless a request is made for a case stated to the High Court, on a point of law. The Appeal Commissioner(s) make their decisions having regard to evidence presented and arguments made by both Revenue and the person assessed. They may confirm the assessment raised or change the quantum of the assessment, i.e., either increasing or reducing the figures in the assessment. In the case of an assessment that has been raised, further tax penalties, if penalties are due based on the facts in the case, will be levied where the assessment is determined in a higher figure. If such an assessment is determined in a lower figure, the tax penalties arising will be reduced; including in some cases a reduction to a nil amount.

I am satisfied that the above procedures are fair and equitable to both the taxpayer and Revenue and are also in line with the provisions for appeals set out in the Taxes Consolidation Act 1997.