Pat Deering (Carlow-Kilkenny, Fine Gael)
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132. To ask the Minister for Finance if he can confirm if all air crew (details supplied) pay their tax under Schedule E; and if he will make a statement on the matter. [43668/17]

Pat Deering (Carlow-Kilkenny, Fine Gael)
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133. To ask the Minister for Finance if Schedule E has been operated by all airlines in respect of all crew regardless of whether they are employed under a contract of service or a contract for service since 1 January 2010. [43669/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 132 and 133 together.

I am informed by Revenue that Section 127B of the Taxes Consolidation Act 1997 came into effect on 1 January 2011. This section provides for the taxation under Schedule E of employment income arising to any member of a flight crew in circumstances where the duties are exercised on aircraft operated in international traffic and where the place of effective management of the aircraft operator is in the State. The provision applies irrespective of the place of residence of the crew member.

Part 42 Chapter 4 of the Taxes Consolidation Act 1997 imposes an obligation on employers to make deductions at source under the PAYE system from the payment of emoluments to an employee (i.e. an individual operating under a contract of service) where those emoluments are taxable under Schedule E.

Thus, where the provisions of Section 127B apply, flight crew will pay tax on their employment income under Schedule E and will be subject to deductions at source under the PAYE system. In the case of a non Irish resident individual, whether this charge is relieved from Irish tax will depend on whether a Double Taxation Agreement is in place between the State and the jurisdiction in which the employee resides.

Section 127B only applies where the individual is an employee and does not apply in the case of an individual operating under a contract for service (i.e. self employed). Where an individual is operating under a contract for service the individual is required to account for the correct tax due under self-assessment rules. Any such individual is required to file an annual income tax return.

Pursuant to Section 851A of the Act, which provides for taxpayer confidentiality, Revenue cannot disclose information relating to a particular taxpayer or a narrowly defined group of taxpayers.

Fergus O'Dowd (Louth, Fine Gael)
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134. To ask the Minister for Finance his views on a matter raised by a person (details supplied) regarding the tax appeals system; and if he will make a statement on the matter. [43690/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The objectives of the Finance (Tax Appeals) Act 2015 are to reform the tax appeals system with a view to ensuring an enhanced and cost effective appeal mechanism for tax cases. The Act, which was commenced on 21st March 2016, inter alia provides for the establishment of the Tax Appeals Commission (TAC) which was established on the same date. A key feature of the legislation is that taxpayers now make their appeals against Revenue decisions directly to the TAC and not through Revenue.

The TAC has recently undertaken a consultative process related to the operation of its rules of procedure involving all stakeholders. This was a listening exercise providing an opportunity to raise issues about the operation of the reformed tax appeals system. I have recently received a report from the Tax Appeal Commissioners in relation to their consultation exercise which is under consideration in my Department.

In relation to the issues raised in the details supplied with the Deputy’s question, Revenue has a statutory obligation to collect tax, pursue recovery of tax debt and ensure that the tax system is administered in a fair and equitable manner. While tax write out features in the overall approach to tax debt management in all modern tax administrations, in the overall context of the collection and enforcement effort, the extent of recourse to write out by Revenue is very infrequent. The only circumstance where tax is written out is where a business/taxpayer is adjudicated insolvent, has ceased to trade with no assets, where collection is uneconomic to pursue, or where collection would cause undue hardship. Where a decision not to pursue a debt is made, the debt effectively becomes dormant. Tax write out only reflects a decision not to pursue the debt for a period of time and in certain cases, the write out can be reversed if and when Revenue considers that the taxpayer’s circumstances have changed. 

All write-out cases are closely monitored by the Comptroller and Auditor General. Chapter 21 of the recent Comptroller & Auditor General ‘Accounts of the Public Services’ report sets out the broad principles underlying Revenue’s approach to tax debt collection and reviews Revenue’s processes for ‘writing out’ debt deemed to be uncollectible, the reasons underlying the write outs and the amounts of debt written out by category of tax.

In relation to Revenue’s use of counsel and appeals to the Courts I am advised by Revenue that it does not always engage counsel irrespective of the size of the case. Revenue has robust internal procedures concerning the use of counsel, both junior and senior. The decision to engage counsel in an appeal is dealt with on a case by case basis. There are appeals where Revenue officers present Revenue’s case and there are appeals, particularly cases in which a point of law, rather than the quantum of a tax liability, is being disputed, where counsel (whether junior or senior) is more likely to be engaged.

Revenue also advises that any decision to pursue an appeal case to the Courts following a determination of Appeal Commissioners follows an analysis of the both the quantum of tax at stake and the precedential nature of the point of law in question. I am advised that certain cases where a relatively small quantum of tax is a stake could result in a significant loss to the Exchequer if an incorrect interpretation of law is accepted and applied generally, and that it is Revenue’s duty to pursue cases where doubt exists as to the correct position.

In relation to an opportunity to settle I am advised by Revenue that all taxpayers with an appeal have had, and continue to have, the opportunity to settle the appeal by agreement with Revenue. On 21 March 2016, the date on which the Finance (Tax Appeals) Act 2015 came into operation Revenue was still dealing with appeals that were made before this date but that had not yet been referred to the Appeal Commissioners. Revenue was obliged under Section 31 of the 2015 Act to refer such appeals to the TAC as soon as practicable after 21 March 2016. However, before doing so, Revenue was required to notify the appellant of this statutory requirement and to request that the appellant indicate whether he or she wished to settle the appeal by agreement with Revenue or to have the appeal referred to the TAC for hearing. Where the appellant indicated a wish to settle the appeal by agreement but agreement was not then reached, Revenue was required to refer the appeal to the TAC.

In addition to this express statutory provision, Revenue advise that they are always willing to engage in discussion with taxpayers and their agents with a view to settling appeals prior to any hearing before the TAC and also prior to any hearing by the Courts where a case proceeds to that level.

As regards opportunities to address backlog I am advised that of the backlog of appeal cases on hands there is a significant volume of cases that may potentially by addressed in groups where the matter in dispute is common across a number of taxpayers. While the authority to consider appeal cases in this manner is statutorily vested in the TAC,  Revenue advises that it is very supportive of this approach and will provide any assistance necessary to the TAC to enable it to address the backlog of cases by considering appeals in groups where this is an appropriate approach.