Who are the appeal commissioners?

The appeal commissioners who sit in a modern chamber overlooking a leafy stretch of the Grand Canal have suddenly been catapulted…

The appeal commissioners who sit in a modern chamber overlooking a leafy stretch of the Grand Canal have suddenly been catapulted into prominence.

There are two commissioners, appointed by the Minister for Finance, who arbitrate on issues between taxpayers and the Revenue. For many years they would have heard dozens of cases each week. Most would be of little consequence, and only a small percentage would establish any precedent or point of challenge over principle.

All that changed in the late 1980s, and items which now go for appeal are confined to technical issues or points of interpretation where the Revenue Commissioners and the taxpayer are unable to agree. The vast bulk of the cases, which formally went to the appeal, are now settled under the self-assessment/ revenue audit system.

At present the appeal commissioners hear perhaps 50 to 60 cases a year. These are all concerned with technical issues on the interpretation of tax legislation. While these cases are of supreme importance to the persons concerned and the tax practitioners generally, for the most part they hold little interest for the public. The case of Mr Charles Haughey is therefore unique.

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For many years tax practitioners felt particularly aggrieved that decisions of the appeal commissioner were not made public. This placed the taxpayer and his adviser at a particular disadvantage relative to the Revenue Commissioners who would have knowledge of all such decisions and could use them as precedents.

Finally the Finance Act, 1998, stated: "The appeal commissioners may make arrangements for the publication of reports of such of their determinations as they consider appropriate, but they shall ensure that any such report is in a form which, in so far as possible, prevents the identification of any person whose affairs are dealt with in the examination".

So far no such decisions have been published, and the present case would appear to be one where publication is indeed appropriate. I need hardly add that it will take rather clever reporting in this case to disguise the identity of the person involved.

At an appeal hearing the inspector attends and is entitled "to produce any lawful evidence in support of the assessment and to give reasons in support of assessment". Clearly that is what happened in this case. At an appeal hearing the onus of proof lies firmly on the taxpayer. However, once evidence has been called the onus can be transferred to the inspector, who might fail if no valid evidence is adduced.

The appeal commissioner, having heard all the relevant evidence, gives his decision. Where a taxpayer is dissatisfied with a decision he can call to have the case reheard by the Circuit Court. Where this happens there is a full rehearing of the evidence. This right resides with the Revenue Commissioners only in the case of Capital Acquisitions Tax.

In the case of all other taxes, they must, if they wish to appeal, take the matter to the High Court. A case for the High Court can only go on a point of law. It cannot be taken on a point of fact. In this case the Revenue would appear to have two options, namely go for a full rehearing of the case in the Circuit Court or by way of a case stated to the High Court. Only in the case of Capital Acquisitions Tax does such a choice lie with the Revenue Commissioners.

Fewer than 10 cases a year make their way from the appeal commissioners to the High Court. Where a taxpayer loses at appeal he will normally take the option of having the matter reheard by the Circuit Court and at that stage decide whether there are grounds for appeal to the High Court and whether such should be pursued. In the majority of cases, the taxpayer, if he loses, will seek a rehearing in the Circuit Court. This is not invariably the outcome.

In the celebrated case of Patrick McGrath v J. E. McDermott, the appellant Mr McGrath lost at appeal but decided to take his case directly to the High Court. Such a decision would presumably be based on being satisfied that all evidence had been adduced at the appeal commissioners and that their decision was simply wrong on a point of law. In the McGrath case the High Court and subsequently the Supreme Court upheld his appeal and ruled that the appeal commissioners were in fact incorrect in their interpretation of the legislation.

Following this line it would appear that if the Revenue Commissioners are satisfied with the evidence they have produced they would simply ask the High Court to review the point of law. Alternatively, they may choose to have all the evidence reheard at Circuit Court and seek to persuade the judge that this evidence points to a different conclusion.

This particular case will be interesting on the area of evidence. It is generally assumed by tax practitioners that the strict rules of evidence are more closely followed in the Circuit Court than before the appeal commissioners. This aspect of affairs must be concerning the Revenue Commissioners. The Circuit Court normally seeks a higher, not lesser, level of proof.

The case may also bring to a head another central issue in tax practice. Since 1992 many tax offences which were formally civil in nature have now become criminal. Faced with such a possibility an appellant may choose not to provide evidence, which might be used against him, but rather to test the proofs of the opposing side.

The procedure at both appeal commissioners and Circuit Court are private and, while this holds true for both the High Court and Supreme Court, nevertheless the method of hearing used gives a pretty full picture of what transpires.

A case for the High Court is by way of case stated. The procedure on a case stated is that a draft of the case is prepared which sets out the facts as agreed, those items alleged by either the taxpayer or the Revenue Commissioners and the arguments advanced by both sides.

The appeal commissioner gives his decision, explains the rationale for accepting certain arguments and rejecting others, and sets out the basis for his final determination. This is the central document which then passes to the High Court.

No further evidence is taken at that stage. The High Court reviews the case stated and gives its decision.

By these means the detailed arguments and the reasoning at the different level are apparent. This case will almost certainly arrive at the High Court. A full picture will only then emerge. It looks as if Mr Haughey will keep the exponents of tax practice thinking for some time yet.

Dr Frank Brennan is a taxation specialist and partner in Frank Brennan Ltd