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Tax: Limited Public Appeal

FoI shows Revenue wanted open hearings to show tax law even-handed. TDs and small business didn’t

THE Department of Finance disregarded arguments by the Revenue Commissioners and its own civil servants that all tax appeal hearings should be held in public.

Finance Minister Michael Noonan instead signed off on legislation whereby those involved in tax appeals can decide to have their hearings held privately … a choice that virtually all seem certain to take advantage of.
The decision to allow these optional private appeals was made despite Revenue advice that open hearings would help public confidence and show that tax law was fair and “even-handed”.

Such hearings are held in public in the UK and that a similar system already existed within Ireland for the Employment Appeals Tribunal

A ministerial submission obtained by Village under Freedom of Information legislation explained that the Revenue Commissioners had been fully in favour of holding tax appeal hearings in public.

It explained:
“Revenue favour the replacement of in camera hearings with public appeal hearings. Its view was that public hearings could enhance public confidence that the tax system was being administered and the law being applied in an even-handed way.

It considered that the current appeals system was established many years ago and its in camera hearing of appeals now appears to be out of line with modern developments in both international and Irish law”.
Revenue had pointed out that such hearings were held in public in the UK and that a similar system already existed within Ireland for the Employment Appeals Tribunal.

The submission, which dates from late 2014, also pointed out that there was a “mistaken public impression” that people’s tax affairs enjoyed “some special degree of confidentiality”.

The document explained: “Revenue is not bound by such confidentiality in the case of legal proceedings”.

The proposal for public hearings was also supported by Minister Noonan’s own officials, despite the “conflicting views” that had emerged during the consultation process for the new legislation.

Representative bodies – including tax accountants and lawyers – had argued that public hearings would discourage individuals from appealing and see the release of commercially sensitive information.

They had also argued that information about third parties can be divulged during such hearings and that the constitutional principle of court proceedings being held in public does not apply to tax appeals.
However, the Minister’s officials still remained in support of public hearings, saying that “in camera tax appeal hearings [should] become the exception rather than the norm”.

It suggested that specific safeguards could be put in place for certain types of appeals.

The submission explained: “Thus, for example, public hearings would not apply in the case of appeals that might have implications for public order or national security or involving sensitive matters other than a person’s financial affairs.

The Appeal Commissioners would also have the flexibility to hear part of an appeal ‘in camera’ and to exclude certain parties from proceedings or part of proceedings”.

They said this would bring the tax appeal system into line with best practice both internationally and nationally and strengthen the independence of the Appeals Commissioner.

A second submission was also prepared for Minister Noonan after discussions of the proposed tax appeal system took place at the Oireachtas Joint Committee on Finance, Public Expenditure and Reform in January of last year.

It explained how members of that committee had questioned the justification of ending in camera hearings.

The Committee members had asked if “this would in fact add value to the process, and whether it would discourage taxpayers from appealing, and particularly militate against smaller taxpayers”.

The Revenue Commissioners were again contacted for their input in March last year and again emphasised their preference for appeals that were open to the public.

They said: “Revenue supports the move to public appeal hearings on the basis that it will result in a more transparent process and enhance public confidence that the system is independent”.

By April, Minister Noonan was presented with another submission, taking into account the concerns of the Oireachtas Joint Committee.
It explained: “The Committee concludes that, while the default position may be for public hearings, it is preferable, on balance, that if the appellant requests it, the hearing be held in private.

The Committee considers that transparency can be enhanced and clarity provided to taxpayers and the general public if all hearings are accompanied by written determinations, as is proposed. Appropriate redactions should be made to protect privacy”.

By Christmas Day when the new legislation was signed into law by President Michael D Higgins, provisions for all hearings to be held in public were gone.

The final legislation allowed taxpayers to opt for a private appeal, and when decisions relating to their case are published – all personal details will be excluded on the same basis.

The new legislation provides for the establishment of a tax appeals commission, which will formalise existing arrangements and detail how commissioners will be appointed.

It will become the first option of appeal for taxpayers unhappy over Revenue decisions, rather than the existing appeals mechanism within the Revenue Commissioners, as happens currently.

Asked about the removal of the automatic public hearings from the legislation, the Revenue Commissioners said they had “nothing further to add”.

They said: “Responsibility for taxes legislation rests with the Minister for Finance and the Government. Revenue’s responsibility is for the fair and impartial administration of tax legislation in place”.

The Department of Finance in a statement referred back to a speech given in the Dáil by Minister of State Simon Harris in September explaining the rationale.

“While public hearings will be the default arrangement, part or all of a hearing will be held in private on application by an appellant”, he said.
“I consider that this will meet the concerns of stakeholders, and particularly concerns voiced by Deputies on behalf of small business people.

Concerns were expressed that small shopkeepers, for example, could find themselves involved in a public hearing, perhaps with customers in attendance, and with material from the hearing being reported locally. Such publicity could undermine their business, even if the appeal were upheld”.