Almost €2bn worth of tax appeal cases to be heard this year

The State body responsible for hearing tax appeals has scheduled hearings for cases with a total value of €1.9 billion this year, including the action in which US pharma giant Perrigo will appeal its €1.64 billion tax bill.

Appearing before the Public Accounts Committee (PAC), the Tax Appeals Commission (TAC) outlined its planned workload for this year which includes a month-long hearing in November for Perrigo’s appeal of a 2016 Revenue decision. The €1.64 billion tax assessment served by Revenue related to the sale by Elan of its interests in multiple sclerosis drug Tysabri in 2013 to Biogen for an upfront payment of $3.25 billion and also a share of future royalties.

The dispute centres on Revenue’s decision, following a 2016 audit, to characterise Elan’s sale as a capital transaction, eligible to be taxed at a rate of 33 per cent.

The top 20 appeals before the TAC, some of which will not be heard until next year, amount to €3 billion, with five appellants accounting for €2.8 billion of that. A large majority of appeals have a value of less than €10,000 each.

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Corporation tax

Responding to questioning from Social Democrat joint leader Catherine Murphy, Marie-Claire Maney, the TAC’s chairwoman, noted that 54 per cent of the value of appeals related to corporation tax.

She told the PAC that the commission’s current staff numbers were not feasible when its caseload was considered. “The biggest issue we have is on the commissioners side. What I’d like to see is at least 10 to 12 [more commissioners] which would give us a chance to cover the case load,” Ms Maney said.

Sinn Féin TD Brian Stanley indicated that PAC, of which he is chairman, may recommend in its report following the committee hearing that TAC receives additional commissioners, which would cost the State about €1 million a year.

In a report last year the Comptroller & Auditor General (C&AG) said that the appeals process needed to be speeded up.

Resources to the commission were increased in 2019 by Minister for Finance Paschal Donohoe following a review. The C&AG report said that the commission had agreed to set new targets for managing cases and push forward with updating its case-management system, which was found to be “not fit for purpose”.

Ms Maney updated the committee on the case-management system that TAC bought in 2018, before she worked with the body, which “didn’t function as intended”. The €212,000 spent on that system was subsequently written off, and TAC is now planning to put out a tender to get a new system. Ms Maney noted that €28,000 has been spent to date to prepare for that tender.

Income tax appeals

Since TAC was established in 2016 it had received 9,073 appeals of Revenue decisions up to June of this year valued at €6.9 billion. Some 56 per cent of those were income tax appeals but they were valued at €900 million, or 13 per cent of the total value.

Some 6,167 appeals valued at €2.7 billion have been closed over the same time period.

Asked by Ms Murphy as to whether any appeals have been sent to TAC related to State wage supports given to companies, Ms Maney said that while they “anticipated an influx [of appeals] with the pandemic payment” none have yet materialised.

Ms Maney said TAC has reduced the backlog of awaited determinations by 80 per cent and the remaining 20 per cent would be cleared by the end of this year. “The commission has made progress. There is some way to go before the commission has the required throughput and output relative to the case base, contributing to the economy and the exchequer.”