Any taxpayer can seek a hearing with an appeal commissioner if they cannot reach agreement with the tax inspector who made the assessment of tax on the taxpayer.
Hearings are held in camera but since the Finance Act 1998 the appeal commissioners can decide to publish reports of their decisions. No reports have been published so far. But the Act, which came into force on March 27th, requires that they ensure that any report is in a form which will prevent the identification of the taxpayer involved.
Since the tax system was changed to self-assessment, the appeal commissioners' workload in terms of the numbers of cases to be heard has reduced, with many more disputes now settled by agreement between the taxpayer and the tax inspector who has raised the assessment, but the cases that come before them tend to be complicated.
In the self-assessment system, individual taxpayers and companies are required to file tax returns - normally Form 11 for the self-employed or those with income from a number of sources, and Form 12 for PAYE workers - setting out details of their income, capital gains and capital acquisitions for the tax year or tax period.
Unusual returns, where there are big variations in income or unusual items of income or capital accumulation, will be picked out for Revenue audit, or full examination.
A taxpayer is likely to face an audit when their return does not tally with the expected results from their sector, profession or trade, or where a tax inspector gets information about the taxpayers from another source which calls their return into question. Some returns will be selected at random for audit.
Following the audit, the tax inspector will issue an assessment to the taxpayer where the inspector judges that the taxpayer has underpaid or not paid tax due. When a taxpayer receives an assessment, he gets 30 days to pay or appeal the sum involved. Taxpayers who decide to appeal the assessment must then decide whether to pay the amount demanded pending the appeal, or to make part payment or no payment. If the taxpayer loses the case, he is liable for interest on the tax due from the day on which it became due at a rate of 1.25 per cent per month.
When a taxpayer decides to appeal to the appeal commissioner, notice must be sent in the first instance to the tax inspector of disagreement with the assessment. Discussions will then take place on the assessment and the vast bulk of cases are resolved.
However if agreement cannot be reached, or a point of principle or technical issue arises, the taxpayer has a right to an independent assessment by an appeal commissioner. Appointed by the Minister for Finance, there are two appeal commissioners who are normally appointed from the senior staff of the Revenue or are lawyers or accountants specialising in taxation.
The taxpayer must apply to the tax inspector for a hearing by an appeal commissioner and the tax inspector must then give the taxpayer notice in writing of the time and place of the hearing. A tax inspector can refuse the application but the taxpayer can then appeal this refusal directly to the appeal commissioners within 15 days of receiving the notice of refusal. A tax inspector who feels a case may be settled by agreement can delay giving a taxpayer notice of an appeal hearing. But if the taxpayer feels there is undue delay by a tax inspector, he/she can again appeal directly to the appeals commissioners for an early listing.
At an appeal hearing the tax inspector is present and can produce evidence in support of the assessment in question and give reasons for it. The appeal commissioners must accept representations from lawyers or accountants or other suitable people on behalf of the taxpayer.
The commissioners can summon witnesses and examine them under oath. They must record their decision on a prescribed form and send it within 10 days to the tax inspector involved. They can postpone their determination and send it out by post when the decision is reached.
There are a number of avenues for appealing the decision of an appeal commissioner.
The taxpayer or the tax inspector can appeal the decision to the High Court by way of "case stated". Either party can express dissatisfaction with the commissioner's decision, claiming it is erroneous on a point of law. The dissatisfied party then has 21 days to give notice in writing requiring the commissioners to state and sign a case for the opinion of the High Court. Normally the commissioner sends drafts of the case to either side and invites comments and it is only when agreement on the contents has been reached that the case is forwarded to the High Court.
A taxpayer whose appeal is dismissed can request a re-hearing of the appeal by the Circuit Court. A taxpayer has 10 days to seek a rehearing. The tax inspector does not have a similar right of rehearing. A taxpayer who is unsuccessful in the Circuit Court can appeal to the High Court.
In the case of gift or inheritance tax (Capital Acquisitions Tax) the tax inspector has the option of a rehearing at the Circuit Court. Hearings by appeal commissioners are not formal legal proceedings as in a court of law but they follow a pattern. The issue is outlined and the legislation involved is set out. Then witnesses are examined by the taxpayer's representative and cross-examined by the tax inspectors and re-examined on points raised in the cross-examination. The tax inspector cannot interrupt during the examination of witnesses. But the commissioner can ask questions at any stage because the hearing is a fact finding tribunal. Then legal submissions on behalf of the taxpayer and the tax inspector are heard and replied to. The appeal commissioners are not bound by strict legal rules in relation to the acceptance of evidence. A commissioner can accept or reject evidence at his own discretion.
For this reason a taxpayer who wins at the appeal commissioner stage is in a very strong position if the tax inspector appeals to the courts because the legal requirements with regard to evidence to prove the case are much more onerous in the courts.