The Government has been accused of stacking the odds against taxpayers who exercise their right to appeal a tax bill.
Under the unheralded measure in the Finance Bill, Revenue will no longer pay interest to taxpayers who win an appeal on money they have paid in advance to the tax authorities.
The move comes as thousands of businesses across the State struggle to survive.
Where a taxpayer appeals a tax bill and loses they are liable to interest charges of up to 10 per cent. To avoid this, many taxpayers make an up-front payment on the understanding that it will be returned should they win their appeal. Under current law Revenue pays interest in those circumstances.
The interest rate has been 4 per cent per annum, less than half the rate Revenue charges for outstanding sums owed.
"The proposed new section would free Revenue from that requirement," the Irish Tax Institute says in a letter to Minister for Finance, Paschal Donohoe.
“The institute believes this provision is unfair and, if introduced, it would unbalance the appeals process to the detriment of the taxpayer. In effect, the change, as proposed, would result in all the odds being stacked against taxpayers who make appeals.”
At the end of last year, €3.75 billion in tax bills was subject to appeal in 3,357 separate cases. The Comptroller and Auditor General found in his annual report, published in September, that these cases had, on average, been before the Tax Appeals Commission for at least two years.
What about dispute resolution?
Tax experts believe that waiting list has been exacerbated by the Covid-19 pandemic.
The tax institute noted that one of the hallmarks of a fair tax system is an effective dispute resolution regime.
“A tax legislative measure that penalises taxpayers who appeal Revenue assessments undermines the effectiveness of the appeals process and runs contrary to the fundamental principle of fairness in the tax system,” it said.
It argues that, without an interest charge, there will effectively be “no brake on the the Revenue’s assessment process.
The institute has called on the Minister to withdraw the measure which, it noted, was introduced without any consultation. There was no mention of the plan in the budget speeches.
