The complainant names used in this Investigation Report are Mr Smith, Mr Dunne and Mr Kelly. The complainants' names have been changed to protect their identities. Other complainants referred to have also had their names changed.
Mr Smith's Complaint
In March 1997, Mr Smith successfully applied for an exemption from Vehicle Registration Tax (VRT), under Article 10(1) of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994 (S.I. No. 353 of 1994), on a car he had bought. Fuel and road tax reliefs were also allowed. He also applied for a refund of VAT on the car.
The VRT relief was claimed in respect of his daughter under the provision in the Regulations relating to passengers with disabilities. It was his third successful application under the scheme. The Revenue Commissioners subsequently decided that Mr Smith's claim to entitlement to an exemption did not come within the terms of Article 10(1) on the basis that his daughter was a full-time resident in a nursing home and was not residing with him as required under the 1994 Regulations.
Mr Smith claimed that it was unfair not to allow him the exemption for the following reasons:
- he had bought a vehicle and it had been adapted so that he could transport his daughter and cater for her personal, social and medical needs;
- his daughter was not a full-time resident in the nursing home. On medical advice it had been recommended that she should spend some time away from her normal place of residence, the Smith family home. In the past she had suffered a severe mental breakdown and had since been on medication. For these reasons she had been availing of the suitable supervised independent living at the nursing home;
- under the 1994 Regulations, the term 'residing' is not defined, nor is it specified that the passenger with disabilities must be residing 'full-time' with the applicant;
- under Article 10(5)(a) of the Regulations, the Revenue Commissioners may waive the residency condition in exceptional circumstances. Mr Smith claimed that, if it was considered that his claim to entitlement to a rebate of VRT was not compatible with the residency requirements of the Regulations, his case merited exemption under Article 10(5)(a) and that Revenue was acting contrary to fair and sound administration in failing to exercise their discretion under this Article.
Facts established in the preliminary examination
The 1994 Regulations govern the remission or repayment of VRT and other related taxes on a vehicle for use by a driver or a passenger with disabilities. Article 10(1) of the Regulations provides, inter alia, that where a person satisfies the Revenue Commissioners that he/she is a family member of a passenger with disabilities, residing with and responsible for the transportation of that passenger, he/she shall be entitled to be repaid VRT in respect of a vehicle purchased for the purpose of transporting the passenger. Article 10(5)(a) grants the Revenue Commissioners discretion to waive the condition concerning the residency of a claimant in exceptional circumstances.
Mr Smith's application was received by Revenue on 12 March 1997. His daughter entered the nursing home in February 1997 when it first opened. At the time of application his daughter had been in the nursing home for a very short time, probably less than four weeks. Following enquiries made in June and September 1997 by the Revenue official responsible for auditing the scheme, who is known as the Control Officer, it emerged that the complainant's daughter had been resident in the home from the time it had opened and that she was transported to and from the home by her parents for day trips on a regular basis.
On the basis of this evidence, Mr Smith was asked to repay to Revenue VRT totalling �5,949 on the grounds that, as he was neither residing with nor responsible for the transport of his daughter, he did not meet the residency requirement and did not qualify under the Regulations. Mr Smith was requested on 13 October 1997 to repay the VRT and was advised of his right of appeal against the decision.
Revenue letter to Mr Smith
"Disabled Drivers Section,
Customs & Excise
Dear Mr Smith,
I refer to your remission of VRT totalling �5,949 on motor vehicle registration number (number deleted) on 27/03/97 under the Disabled Drivers and the Disabled Passengers (Tax Concession) Regulations 1994.
As you are neither residing with nor responsible for the transport of your daughter, Anne Smith, you do not qualify under the above regulations.
By contravening Section 139(3)(d) of the Finance Act 1992, the vehicle is liable to seizure under Section 139(2) of the Finance Act 1992.
A bank draft for �5,949, made payable to the Revenue Commissioners should be forwarded to this office within fourteen days, i.e. 22/10/97. The Vehicle Registration Certificate should also be forwarded so that any restriction on the disposal can be removed.
On receipt of the above monies, the Revenue Commissioners may not institute legal proceedings.
This decision may be appealed. I am enclosing form C&E 6 for your information."
In repaying the VRT, Mr Smith exercised his right of appeal. He addressed his appeal to the Collector, Customs and Excise, Customs House, Galway citing the fact that his daughter was not living in the nursing home on a permanent basis. His letter of appeal was forwarded to the Collector, Customs and Excise, Custom House, Dublin in October 1997. On 13 November 1997, the Collector wrote to Mr Smith stating that, as his daughter was a full-time resident of a nursing home, her case did not come within the terms of Article 10(1) of the 1994 Regulations. Mr Smith was advised that he could make a further appeal to the Appeal Commissioners.
Having issued the letter to Mr Smith, the Collector sent a memo to VRT Administration Branch, Office of the Revenue Commissioners, in which he said:
- (a) the Smith case was not unlike another case (the Duffy case) where the residency requirement was waived and VRT exemption was allowed;
- (b) Mr Smith appeared to be reasonably open in his dealings with Revenue;
- (c) that he (the Collector) was inclined to believe that Mr Smith transported his daughter fairly regularly; and
- (d) the fact that his application at the time of completion described his residence as her address was not unreasonable as he would regard it as her family home.
Responding to the Collector's memo, another Revenue official in the VRT Administration Branch considered that, while there were similarities between the two cases (Smith and Duffy), there were two basic differences:
- in the Duffy case the applicant had stated from the outset that the passenger with disabilities was non-resident and had never tried to conceal or exaggerate the actual position; and
- a social worker had confirmed relevant statements made by the applicant regarding the circumstances of the passenger with disabilities in the Duffy case and had made a strong case as regards the importance of trips home for him. He added that there was no equivalent letter in the Smith case.
Mr Smith appealed to the Appeal Commissioners in December 1997 stating that, if the arguments previously made in respect of residency were not acceptable, the exceptional circumstances waiver provided for in Article 10(5)(a) should apply in his case. The appeal was heard on 31 March 1998. The determination of the Appeal Commissioner was that relief should be refused as the daughter was not residing with her father.
The Appeal Commissioner did not make a determination as to whether the exceptional circumstances provided for in Article 10(5)(a) applied in Mr Smith's case. According to the Office of the Revenue Commissioners, the Appeal Commissioners had accepted in a similar case that the determination of exceptional circumstances was a matter wholly at the discretion of the Revenue Commissioners and was not a matter on which the Appeal Commissioners could adjudicate. In that particular case, the Appeal Commissioners had concurred with the view put forward by a Revenue official who had maintained that it was clear that the determination of exceptional circumstances was delegated by the Minister for Finance, through the Regulations, to the Revenue Commissioners and that the Appeal Commissioners had no role to play in the matter. The Appeal Commissioner's role was in relation to establishing the facts of the case and to ensuring the correct application of the law.
Extract from Mr Smith's letter of 27 April 1998 to the Ombudsman
"Anne is presently living in the Nursing Home but she still spends a considerable amount of her time at home, as our house has been fully adapted for her needs.
I was fully aware when I signed the documentation to apply for the VRT of the "Residency Requirement" under the Disabled Drivers and Passengers (Tax Concessions) Regulations 1994 but my family and I regard Anne as being as much resident in our house as in the Home.
If Anne had been a little better physically, she would be able to drive herself and the issue of 'residency' for the VRT would be obsolete in her case.
I believe that the attempts of my daughter to live independently should not be penalised by the withdrawal of the VRT from my car."
The Other Complaints
In the course of my examination of Mr Smith's complaint, I received four other complaints about the refusal of relief under the 1994 Regulations on grounds that the residency requirement had not been met by the applicant. Two of these complaints, those of Mr Dunne and Mr Kelly, are also the subject of this investigation. The other two complaints - from Ms Moore and Ms Flynn - were resolved to the satisfaction of the complainants; some details of these complaints are given below.
Mr Dunne applied for tax relief on behalf of his 84 year old mother who had been granted the primary medical certificate required for qualification under the scheme [the primary medical certificate is provided by the local Health Board where the Senior Area Medical Officer is satisfied that the person meets the scheme's medical criteria]. Mr Dunne lived a short distance from his mother's house with his wife and children. His application for relief was refused on the grounds that he was not residing with his mother. This decision was upheld on appeal and the Revenue Commissioners also stated that the particular circumstances of the case were not of an exceptional nature to warrant the exercise of the waiver of the residency requirement under Regulation 10(5)(a). Mr Dunne was informed of his right to appeal to the Appeal Commissioners but did not exercise this right within the prescribed 30 day period.
Mr Kelly applied for tax relief under the Regulations on behalf of his wife. Mrs Kelly had been granted the primary medical certificate required for qualification under the scheme. Due to the fact that it was not possible for her family to provide the proper nursing care appropriate for her disability at home, she became a resident in a nursing home. Mr Kelly's application for relief was refused on the grounds that he was not residing with his wife. This decision was upheld on appeal. Mr Kelly's request for a hearing before the Appeal Commissioners was refused as it was deemed that he did not have valid legal grounds for such an appeal. He was advised that he could appeal the decision to refuse him access to the Appeal Commissioners. He chose not to do so.
Mr Kelly's letter to Revenue, 29 September 1998 appealing the decision not to give him tax relief
"What is central to my appealing the decision is the fact that my wife not residing with me was not a choice and in the circumstances I feel that the Regulations set out in the letter dated 17/9/98 are too restrictive and unrealistic in my situation and must be for many thousands of people physically handicapped who are no longer able to be looked after in the family home.
My wife Marion is totally paralysed and is unable to move a finger and therefore cannot assist herself in any way. Consequently neither myself (now 65 years of age - Marion is 57) nor my three daughters can continue to lift Marion out of her wheelchair and out of the normal private car - hence the decision to seek an alternative means of transport.
Our entire family are very conscious of the quality of life for Marion who still enjoys life in spite of terrible illness. The nursing home will not provide any means of transport.
On a lighter note I suppose if I joined my wife in the nursing home as a resident I would qualify under the said Regulations!!!"
The Revenue Commissioners also indicated that Article 10(5)(a) of the Regulations which provides for the waiver of the residency requirement in exceptional circumstances was taken into account but that the circumstances of the Kelly case were not considered to be of an exceptional nature for the purposes of the Article. In this connection, I asked the Revenue Commissioners what type of circumstances would be regarded as exceptional under the Article and to give specific examples of cases where the residency requirement has been waived in accordance with Article (10)(5)(a).
In their response, the Revenue Commissioners said that by their very nature "exceptional circumstances" were circumstances that do not arise on a regular basis and as such cannot be made the subject of predetermined criteria. In general terms, the sort of circumstances that were envisaged were those that could not have been foreseen at the time the Regulations were drawn up. Each such case was considered on its own merits and was regarded as being sui generis. In considering any such application, the totality of the case was looked at and all the circumstances, as represented to Revenue, were taken into account. Revenue would take into account, for example:
- - the extent to which the person with disabilities was reliant on the applicant for transport and the other transport options available;
- - the degree to which transport of the person with disabilities was required;
- - the level of usage of the vehicle for that purpose;
- - financial hardship, e.g., where the applicant did not own a vehicle and could only afford to purchase one where relief was granted;
- - physical hardship, e.g., age or incapacity of applicant or other family member;
- - the proximity between the two residences concerned, etc.
The Commissioners pointed out that this list was not exhaustive but was an indicator of the type of considerations that can arise. They added that, because such cases are sui generis and "non-precedential", a formal record of cases where the waiver is allowed was not maintained. However, they said that in a recent application the waiver was allowed where the applicant was required, under contract with the residential home, to take his son home for visits on a regular basis and to provide the necessary transportation. The applicant in that case was an old age pensioner who represented to Revenue that he had no vehicle at the time of application, would not otherwise have required one and would not have been able to afford one without the tax relief. In another case, the applicant and the person with disabilities lived in immediately adjoining residences which shared a common entrance - in effect it was decided that the residency rule was met in that case.
Ms Moore applied for tax relief under the Regulations on behalf of her daughter. Ms Moore's daughter had been granted the primary medical certificate required under the scheme. On the application form Ms Moore indicated that her daughter was resident both at the home address and at a nursing home. The Revenue Commissioners refused the application on the basis that the residency requirement was not being complied with.
The decision was upheld on appeal and a hearing before the Appeal Commissioners was requested. This request was granted but, while this appeal was waiting to be heard, the Revenue Commissioners reviewed the case in the light of her complaint to me and decided that, for the purposes of the relief sought, Ms Moore could be regarded as resident with her daughter. The relief was subsequently allowed. In arriving at this decision the Revenue Commissioners said that they took account of the following circumstances:
- - the fact that the daughter was under 18 years of age and a minor;
- - the amount of time spent by the daughter with her family, in total more than five months in the year; and
- - the degree of the daughter's dependency on the applicant, in particular for transport, on a day-to-day basis.
Ms Flynn applied for tax relief under the Regulations on behalf of her son. Ms Flynn's son had been granted the primary medical certificate required under the scheme. On the application form Ms Flynn indicated that her son was in residential care in a nursing home. The Revenue Commissioners refused the application on the basis that the residency requirement was not being complied with. This decision was upheld on appeal and Ms Flynn was advised as to the procedure for having the refusal dealt with by the Appeal Commissioners.
The decision was subsequently reviewed by the Revenue Commissioners in the light of additional information supplied by Ms Flynn and the decision taken in the Moore case referred to above. As a result of this review, the Revenue Commissioners decided to accept that the residency rule was complied with in this instance bearing in mind:
- - the fact that the son was a minor and under the general care of his parents;
- - the proportion of time spent with his parents on a regular and ongoing basis;
- - the son's dependence on his mother to provide for his transport needs on a day-to-day basis.