Law Reform body not in favour of Revenue Court

THE Law Reform Commission has adopted a “safety first” approach to reform in the area of tax law enforcement by passing up the opportunity to recommend the establishment of a specialist Revenue Court and a new post of Director of Fiscal Prosecutions.

The view of the commission is that the appointment of a new DFP to stand alongside the Director of Public Prosecutions would lead to “further fragmentation of the public prosecution system.”

The commission went as far as to suggest that a Director of Fiscal Prosecutions would run the risk of developing, or being perceived as developing “too much affinity” with those who work in the area, including presumably tax officials. Accordingly, it recommended that “the arrangements currently in place for the prosecution of revenue offences be maintained for a period and then reviewed in a few years.”

The LRC was also asked to consider whether a specialist court should be established to hear tax appeals. Proponents of reform argue that significant advantages in justice and efficiency would arise when compared with the current system where complaints by taxpayers are first heard by Appeal Commissioners from which body there is a limited right of appeal to the Circuit Court.

Under the current system, tax appeals are heard by judges who are generally not specialists, but are “simply those who happen to be sitting at the time and place the appeal arises.”

However, the LRC is alert to the dangers, as it sees it, in going down the road of a specialist court. The list of potential drawbacks is quite long.

Here are just a few of those cited.

“The loss of a generalist overview; the risk of a development of a cosy culture between the specialist judges and advocates and even between the judges and the Revenue Commissioners; the potential isolation of the specialist area of law from the development of general law.”

The LRC concludes that the current arrangements, “offering the taxpayer the right of appeal to an informal specialist tribunal in the form of the Appeal Commissioners, and from there to the more informal generalist Circuit Court, provide more advantages than those associated with specialist civil revenue courts.”

However, the commission accepts that certain changes will be required.

Judges with knowledge of tax law should, it suggests, be nominated to hear tax appeals under the system known in legal circles as a “revenue list.”

The commission has been more adventurous in its suggestions for an overhaul in the tax appeals structure.

The Appeal Commissioners are intended to act as an important check on the operations of the Revenue, which has been equipped with ever increasing powers and resources since the 1980s.

The commissioners hear appeals concerning a wide range of tax determinations. Appeals are relatively informal and hearings are held in-camera. In practice, a small proportion of cases listed with the Appeal Commissioners actually go to a hearing. The rest result in settlements between the taxpayer and the Revenue.