Is appeals balance tipping against the taxpayer?

One of the advantages of the new system of tax appeals is that the commission responsible for hearing them publishes its determinations. Under the old system, which applied up to December 2015, taxpayers appealed in the first instance to an appeals commissioner who was part of the Revenue system. Details of decisions and disputes only came to light if they ended up going beyond the appeals system to the courts.

Two recent cases indicate that the balance can in some cases be against the taxpayer. In one case an 85-year-old pensioner appealed as his spouse had paid too much tax over a 15-year period, due to a Revenue error in relation to a PAYE tax credit. In another case, a taxpayer was not aware he was due a refund, and left it more than four years to claim the money. In both cases the commissioner ruled that it did not have the power to order refunds which went back further than the four-year period set down in Revenue law. For this reason, both taxpayers were left out of pocket, despite the fact that both they and the Revenue agreed they had paid too much.

Penalties and interest

Under our current system, all the onus is on the taxpayer to notice if they are overcharged, On the other hand, the Revenue has wide powers to impose penalties and interest if the taxpayer has underpaid.

Some tax experts argue that time limits are a fundamental part of any tax system – and that the appeals to the commissioners in these two cases were never going to succeed. Other say that the Revenue should never have fought such cases in the first place. No doubt the Revenue is conscious now of the public nature of the appeals process and of having to do everything “by the book”.

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But surely one of the points of the new appeals process is for the commission to be free to make decisions? In this case, the commissioner felt that the law tied the commission’s hands. Perhaps, then, some legal tweak is needed to allow for such cases. When both sides agree that too much tax was paid, it does seem very odd that repayment cannot be made.