The Revenue Commissioners wants to adopt a “class action” approach to tax appeals in an effort to speed up tax collection.
In its contribution to a consultation process on the subject, it notes that it already has a group of cases which would be suitable for such an approach.
Others suggest that the whole appeals process is “in jeopardy” as the appeals commission remains “chronically under-resourced” and dealing with Revenue becomes “increasingly fractious”.
The comments come in response to a consultation paper launched by the Tax Appeals Commission back in September, looking for views on how to enhance taxpayer engagement with the commission. The commission was formed in March 2016 with a remit of strengthening the independence of those looking to appeal Revenue decisions.
In the document, the commission sought comment on a number of areas, including whether or not it would be appropriate for it to pursue a “class action” approach where it has multiple appeals on the same or very similar matters.
Test case
If the commission was to adopt such an approach, it is understood it would involve the commission hearing a single “test case” from a group of similar or related appeals. The determination would then be binding on all of the appellants in the group, without their individual cases being heard.
While the Revenue notes that a safeguard would be that someone who has made an appeal may make a case against a class action, ultimately it would be up to the commission to decide on this.
For the Revenue, such an approach would be “an important efficiency measure” which would allow the time-pressed Tax Appeal Commission to “effectively dispense with individual hearings”. It said it had already identified a number of groups where a class-action approach might be appropriate. However, it declined to disclose when asked what these groups might be.
The Revenue said that a class action could be “particularly important”in the context of tax-avoidance schemes whereby appellants typically seek to postpone a determination for as long as possible.
Lack of resources
Other submissions to the consultation process identify a lack of resources at the commission as being problematic. Some 4,387 appeals are currently before the body, with an average of 20 new appeals lodged every week. About €1.5 billion in tax revenue was in dispute as of September 20th, 2017.
The Council of the Bar of Ireland goes so far as to say the whole appeals process is in “jeopardy” as the commission “is chronically under-resourced”. This means delays for those waiting for their appeal to be heard, the council says, noting that they face “punitive” interest charges of 8-10 per cent of the tax underpaid. It argues that these charges should be suspended pending the determination of the appeal.
System delays
The Irish Tax Institute agrees, noting "taxpayers are not responsible for the delays" in the system. It says a taxpayer waiting four years for an appeal to be heard may end up with an interest bill of some 40 per cent of the tax owed.
The institute also notes that “Revenue appears more reluctant to settle cases than in the past”. That means more cases where only small amounts are being appealed are going to the tax appeals commission, it said, calling for a separate “small claims” type model for smaller taxpayers.
In a similar vein, the Consultative Committee of Accountancy Bodies (CCAB) says that members find dealing with Revenue to be “ increasingly fractious”.
