The Court of Appeal has ruled that the Appeal Commissioners and Circuit Court could not decide, in an appeal against an income tax assessment, whether Revenue had settled the underlying liability with the taxpayer. It allowed an appeal by the Revenue Commissioners and proposed that the first question in the case stated be answered to confirm that limit on jurisdiction.
The case concerned assessments issued to Kenny Lee for income tax years 2000 to 2009. Revenue assessed the aggregate liability at €536,322. Lee argued that a €12,500 payment sent by his solicitor in January 2009 had been offered and accepted in full and final settlement for earlier years. Revenue treated the cheque as a payment on account and later offered to return the money. Lee also challenged the assessments as excessive.
An Appeal Commissioner rejected Revenue’s argument that he lacked jurisdiction to consider whether a settlement had been reached, but found that no settlement had been agreed and confirmed the assessments. On appeal, the Circuit Court judge ruled that he lacked jurisdiction to decide either the settlement issue or whether Revenue was estopped from denying a settlement. The judge later confirmed the assessments. The High Court held that the tax appeal bodies could determine whether there was a contractual settlement, but could not hear claims based on legitimate expectation or estoppel.
Revenue appealed the High Court’s ruling on settlement jurisdiction. The Court of Appeal held that the statutory appeal process is confined to whether an assessment correctly applies the tax charge set by the Taxes Consolidation Act 1997. The appeal bodies may decide factual and legal questions incidental to that task, but they cannot decide whether a separate contract compromised the liability or whether estoppel or legitimate expectation prevents Revenue from enforcing it.
The court said the appeal bodies’ role is to examine the assessment and relevant charging provisions, and to abate, reduce, confirm or increase the assessment as the legislation allows. Determining rights under a settlement would involve a distinct contractual claim, outside that tax jurisdiction. Such claims, as well as the public law and estoppel issues discussed in the judgment, were not within the remit of the appeal bodies in this type of appeal.
The Court of Appeal proposed that Revenue receive its costs of the appeal and High Court proceedings. It gave Lee ten days from the judgment to make a short submission disputing any part of the proposed costs order, after which Revenue would have ten days to respond. The judgment does not determine whether the parties in fact reached a settlement; the Court held that the tax appeal bodies lacked jurisdiction to decide that question.