C&AG urges action to clear €3.75bn backlog on tax appeals

The decision making process when taxpayers appeal against an assessment by the Revenue Commissioners needs to be speeded up, with some €3.75 billion in taxes caught up in the process , according to the Comptroller & Auditor General (C&AG).

Cases at the Tax Appeals Commission at the end of last year had on average been in that process for at least two years, according to a study published as part of the C&AG's annual report, with one quarter under appeal for at least three years. The commission and the C&AG have agreed some new targets to try to speed up the process.

The commission was established in 2016 to establish a body separate from the Revenue Commissioners to consider tax appeals and to try to accelerate decisions when appears were made. Some €1.1 billion in appeals was transferred to it on establishment in almost 1,500 cases. By the end of las year the total had risen to €3.75 billion in 3,357 cases.

The report says that €2.2 billion of the outstanding amount relates to five cases lodged at the end of 2018, though it does not say if these cases are linked. Sources believe that some of the bigger cases relate to disputes over the Revenue's application of transfer pricing rules, including an appeal by US drug company Perrigo against a €1.64 billion tax assessment.

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Updating management system

Resources to the commission were increased last year by Minister for Finance, Paschal Donohoe, following a review. The C&AG report says that the commission has now 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".

Delays were also identified in the time it took to issue determinations after hearings. The commission has now agreed that the maximum delay in issues a determination after a hearing is held will be three months for the largest cases with liabilities of over €10 million, with a shorter time frame where less money is involved.

The C&AG’s report also calls for systems improvements in the Revenue to monitor more accurately the impact of appeals.