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Passengers with Disabilities

Chapter 4

Chapter 4

Analysis

Having carried out a preliminary examination of the complaints received, and having considered the responses received from the Revenue Commissioners, I decided to proceed with the investigation of the complaints. I notified the Revenue Commissioners of my decision to investigate the complaints under Section 4 of the Ombudsman Act, 1980, on 28 May 1999. I also informed the Revenue Commissioners that, in deciding to investigate, I had taken into account the provisions of Section 5(1) of the Ombudsman Act, 1980 and that it appeared to me that the special circumstances of these complaints made it proper for me to investigate them. Section 5(1) of the Ombudsman Act deals with exclusions to my jurisdiction.

Jurisdiction of the Ombudsman

The Ombudsman Act, 1980 at Section 5(1)(a)(iii) provides that I shall not investigate any action taken by a public body if the person affected by the action has a right of appeal, reference or review to a body which is not within my remit. Each of the complainants in these cases had such a right of appeal to the Appeal Commissioners. Decisions of the Appeal Commissioners do not come within my jurisdiction. Mr Smith exercised this right of appeal, Mr Kelly was refused permission to appeal (although he was advised of his right to appeal this refusal to the Appeal Commissioners) and Mr Dunne did not exercise this right within the specified time limit. The Ombudsman Act also provides, however, that, notwithstanding the provisions of Section 5(1)(a), I may investigate actions to which this subsection relates if it appears to me that special circumstances make it proper to do so. In these cases, I decided that such special circumstances existed for the following reasons:

(i) Given the fact that the Appeal Commissioners have accepted that the determination of exceptional circumstances provided for in the 1994 Regulations at Article 10(5)(a) is a matter solely for the Revenue Commissioners and that they have no role to play in the matter, it seems that there is no right of appeal in cases which may hinge on this Article.

(ii) To my mind, the circumstances surrounding each of these cases are special; each of the complainants is a dedicated carer struggling to provide support for a loved one with disabilities and doing so in the face of enormous difficulties.

Scrutiny of Secondary Legislation

In Chapter 2 and Chapter 3 of this Investigation Report, I have dealt with the background to the provision of tax relief for drivers and passengers with disabilities and with the introduction of the 1994 Regulations. I am concerned that the imposition of the residency requirement in respect of the tax relief for passengers with disabilities may be ultra vires the terms of the Finance Act, 1989. There is no reference in the Act to a residency requirement yet this is introduced in the Regulations. I have commented in my Annual Reports and in other published Investigation Reports, notably the Report on Lost Pension Arrears (June 1999) and the Report on Nursing Home Subventions (January 2001) on the lack of scrutiny by the Oireachtas of the terms of secondary legislation and the need to ensure that such regulations stay within the terms of the relevant primary legislation. I do not propose to comment in detail on this issue in the present report.

The investigation of these complaints has centred on the following matters:

(i) the purpose and scope of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations;

(ii) the terms and conditions of the scheme;

(iii) the residency question;

(iv) the circumstances in which the residency requirement may be waived; and

(v) the particular treatment of the complainants by the Revenue Commissioners. In accordance with Section 6(6) of the Ombudsman Act, 1980, I gave a draft of this report to the Revenue Commissioners in order to allow them to make representations to me in relation to any finding or criticism adverse to them in the draft report. I have incorporated their comments, where appropriate, in this report.

The purpose and scope of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations

The scheme governing the provision of tax relief for drivers and passengers with disabilities was introduced to enhance the potential for mobility of qualifying persons with disabilities by providing tax relief on the purchase, adaptation and use of vehicles. The financial benefits of the scheme are significant and the scheme plays a direct and positive role in improving the quality of life of those drivers or passengers who benefit under the scheme by:

• - increasing opportunities for participation in the community;
• - promoting social inclusion;
• - encouraging independence and personal development and
• - improving potential opportunities for employment.

Under the scheme, a new car may be purchased every two years free of VAT and VRT, subject to certain monetary limits. In addition, the annual road tax is not charged and the qualifying person is eligible for the provision per annum of 2,728 litres of road fuel free of excise duty. The operation of the scheme has substantial cost implications for the exchequer and these are increasing with the growth in participation in the scheme. For example, in 1994 the cost of the scheme was in the region of �4m; in 1999 the cost increased to �18m. The most recent information available indicates that in 2000 the cost would be �21m and the forecast for 2001 is �25m.

Eligibility under the scheme is restricted to specific categories of persons with disabilities. In this regard it is estimated that, of the 350,000 persons in the State with some form of disability, roughly only 7,000 actually benefit under the scheme.

I accept that the cost of the scheme and the fact that public monies are involved require that there should be strict accountability in terms of the operation of the scheme. However, it is also the case that the scheme should be reviewed in the light of the increased awareness of the needs of persons with disabilities and the new and very welcome emphasis on equality and tolerance of diversity. While the residency requirements are the focus of this investigation, it is apparent that the limited definition of disability also requires review as does the language employed in the Regulations. The Report of the Commission on the Status of People with Disabilities noted in 1996 that the term "people with disabilities" was preferable to the term "the disabled" if only to emphasise that people with disabilities are people first and foremost. The Report also recommended that the medical criteria governing eligibility for both drivers and passengers be reviewed. As with other schemes operated by public bodies, I am concerned as Ombudsman that such schemes should be operated sensitively and with regard to the particular needs of potential beneficiaries under the scheme. I understand that an inter-departmental group, chaired by the Department of Justice, Equality and Law Reform, is currently reviewing the Regulations.

The Terms and Conditions of the Scheme

The terms and conditions of the scheme provide for an entitlement to tax relief for two categories of passenger with a disability: (i) where he/she is the purchaser of the vehicle and (ii) where a family member purchases a vehicle which is used to transport the passenger. In the case of (i), there is no residency requirement whereas with (ii), the family member must reside with the passenger.

It is clear that in the cases which are the subject of this investigation each of the passengers in respect of whom the relief was claimed:

(i) possessed the medical certification for eligibility under the scheme, and

(ii) were passengers or prospective passengers in vehicles which had been suitably adapted to cater for their particular type of disability. It is also apparent that each of the passengers involved in these complaints could have purchased the vehicle for which the tax reliefs were claimed and in which they were to be transported. If they had done so, each would have qualified for tax relief under Article 10(1) of the Regulations as each would have been a

"... severely and permanently disabled passenger ..." and would have "... borne or paid value-added tax, vehicle registration tax or residual vehicle registration tax in respect of a vehicle or in respect of the adaptation of a vehicle which ..." had " ... been specially constructed or adapted for use by that disabled passenger"

In none of these cases was there an impediment which would have prevented the purchase of the vehicle by the passenger. As is mentioned in Chapter 2 of this report, under the previous scheme the requirement was that the passenger actually purchase the vehicle in respect of which tax exemption was being claimed. In practice, however, the Revenue Commissioners had interpreted this requirement flexibly by allowing for example parents to claim in respect of their children and by letting organisations for people with disabilities claim in respect of their patients.

Article 10(1) gives rise, therefore, to a distinct anomaly in that the tax relief would have been available in each of these cases without any material change in the circumstances of the individuals concerned provided the vehicle had been purchased by the passenger. However, in these cases the relief has been refused because the vehicle was purchased by a family member rather than the passenger.

This is an example of like cases not being treated in like manner. In my Guide to Standards of Best Practice for Public Servants published in conjunction with my Annual Report for 1996 and to which the Revenue Commissioners pledged that they would adhere in their own Customer Service Standards I pointed out that public bodies, with a view to achieving the highest standards of administration in dealing with the citizen, should ensure that citizens are dealt with fairly. In this regard I said that dealing 'fairly' with people meant treating people in similar circumstances the same way. The effect of the decision of the Revenue Commissioners in respect of these cases is that the applicants are being treated unfairly, in that the tax relief which otherwise would have been available if the person with a disability had purchased the vehicle, is being refused because the applicant is the person responsible for driving the passenger with a disability rather than the passenger himself or herself.

Residency

The sole reason put forward by the Revenue Commissioners for refusing tax relief in each of these cases was that the applicants were not residing with the passenger. As I mentioned earlier, there is no residency requirement specified in the primary legislation. In the Regulations the term 'residing with' is not defined nor is it specified that an applicant should be residing 'full-time' with a passenger with disabilities. It would seem reasonable to assume that the reason why these terms are not rigidly defined was to provide some latitude for the exercise of discretion in the assessment of the merits of individual cases. It is evident that this discretion was exercised in an effective and constructive manner in the past by the Office of the Revenue Commissioners and in a number of other cases which this investigation has brought to attention.

It is also reasonable to assume that normally 'residing with' would imply some form of sharing the same residence. However, there are clearly very many instances where a person could be regarded as residing with another person even though, in the short term or even over an extended period, this would not involve sharing a residence, e.g., civil servants, army and Gárda personnel serving abroad or on border duties, commercial travellers, Dáil Deputies and MEPs, charity workers, hospital patients and prisoners. It was never envisaged that such individuals would be excluded from participating in this scheme.

Furthermore, in tax legislation, 'residency' is open to a number of interpretations. For example, in the case of relief from VRT on transfer of residence, in order to qualify for relief a requirement in respect of residency abroad must be met. In the case of a transfer from outside the EU, an applicant must have had their normal residence outside the EU for a continuous period of at least 12 months prior to transfer. In this context, normal residence is defined as meaning the place where the applicant usually lived, for at least 185 days in the year ending on the date of transfer.

The rules for determining the residence of an individual, and the consequent effects on personal taxation are set out in the Finance Acts of 1994 and 1995. Under these rules an individual will be regarded as being resident in the State for a tax year if he or she (i) spends 183 days or more in the State in that tax year or (ii) has a combined presence of 280 days in the State, taking into account the number of days spent in the State in that tax year together with the number of days spent in the State in the preceding tax year.

In the case of persons with disabilities, it is to be expected that periods of hospitalisation or extended nursing home care may be a feature of their lives and that such periods may be protracted.

In the case of Mr Smith, the application was made on behalf of his daughter in March 1997, a short time after she had moved into the nursing home. He stated on the application form that she was resident with him in the family home. While his daughter was residing in the nursing home at the time of the application, it was for a trial period in accordance with medical advice with no clear indication at that stage that it was to be a long-term arrangement. In this context it is reasonable to conclude that her father was fully justified in stating in the application that she resided in the family home.

In the case of Mr Dunne, the evidence indicates that while he was not occupying the same house as his mother, both residences are on the same holding located a short distance apart. This is quite a common arrangement in the farming community and is seen as both a desirable and practical arrangement suitable for maintaining the extended family unit intact while at the same time preserving a degree of independence for the family members.

The circumstances of Mr Dunne's case are not unlike that of another case of an application for tax relief under the scheme (Ms Walsh) where the Revenue Commissioners exercised their discretion in a positive and caring manner when they accepted that the residency requirement was met where the passenger with disabilities lived next door to the applicant.

TEST

Mr Dunne's solicitor complains to the Ombudsman, 22 December 1998 "Our client's cottage is sufficiently close to the farmhouse where his mother now resides on her own for him to be in almost around the clock contact with her. The farmyard immediately adjoins her farmhouse and this is where our client runs his dairy operation. One or other of his family stays with his mother at night-time. This is Elizabeth Dunne's preference as it still leaves her with a measure of independence in her own home yet she and her family have the comfort of knowing that our client Mr Dunne and his family are at hand twenty four hours a day. .... Our client not only has a legal but a moral obligation to look after his mother. It is incomprehensible to him having provided the car seat which is an absolute necessity for her mobility in car transport terms why, from what appears to be an overly strict interpretation of the Regulations in the particular circumstances in our client's case, the relief is being refused. The farmhouse is approximately six miles from the nearest town and three and a half miles to the nearest village. Without the purpose built seat Mrs Dunne can only with severe pain and discomfort get in and out of the car with an ordinary passenger's seat. It is therefore an absolute necessity for her to have the special seat in order to get to Mass, to visit the remainder of her family, and to get to the Doctor's surgery."

TEST

In the case of Mr Kelly, his wife had been resident in the nursing home since 1987. In his application Mr Kelly acknowledged that he was not residing with his wife. However it is evident from this investigation that, in interpreting the residency requirement, the Revenue Commissioners have, in cases where the passenger with a disability was in long-term residential care, exercised their discretion so as to ensure that deserving cases, which initially did not appear to fall within the strict terms of the Regulations, benefited under the scheme. This is evident from the revised decisions in the Moore and Flynn cases referred to earlier. In these cases, the passengers with disabilities residing on an extended basis outside the home were deemed to be resident with the applicants.

While I acknowledge that the Revenue Commissioners take the view that the Duffy, Walsh, Moore, and Flynn cases are "sui generis and non-precedential", I consider that in exercising a discretionary power either to waive the residency requirement or to interpret it in a liberal manner, cognisance must be taken of the factors which influenced similar decisions of this nature. I believe that the factors which influenced the Revenue Commissioners to determine that the residency requirement was met in the Moore and Flynn cases also applied in the Kelly and Smith cases. This would have been the case even if it was deemed that Mr Smith's daughter was permanently resident in the nursing home. In addition, the factors which influenced the decision to determine that the residency requirement was met in the Walsh case also applied in the Dunne case.

Waiving the residency requirement

Under Article 10(5)(a) of the 1994 Regulations, the Revenue Commissioners can waive the residency requirement where it is deemed that exceptional circumstances exist. The question of waiving the residency requirement was raised by Mr Smith as part of his appeal to the Revenue Commissioners. This request was considered by Revenue but was rejected on the grounds that the particular circumstances of his case were not considered to be of an exceptional nature for the purposes of Article 10(5)(a).

The waiver was considered by the Revenue Commissioners in an assessment of the entitlement of another applicant, Mr Duffy, who had applied on behalf of his son. Mr Duffy's son was in full-time residential care in a nursing home and travelled home every second weekend as well as spending Christmas, Easter and part of the summer holiday with his family. In this case the residency requirement was waived.

As mentioned in Chapter 1, the similarities between the Duffy and the Smith cases were commented upon by the Revenue Official who had dealt with Mr Smith's appeal when he stated in an internal memo to another official that he considered that Mr Smith's case was not unlike the Duffy case. The second official's view was that there were two basic differences between the cases. These were that (i) in the Duffy case the applicant stated from the outset that the passenger was non-resident and has never tried to conceal or exaggerate the actual position and that (ii) the Duffys had produced documentary evidence in the form of a letter from a Senior Social Worker which not only confirmed the statements made by them but also made a very strong case as regards the importance of trips home.

The implication of this comment was that Mr Smith had tried to conceal or exaggerate the actual position in respect of his daughter's residency. As I mentioned earlier, it is reasonable to conclude that Mr Smith was fully justified in stating in the application that his daughter resided in the family home and this could not be regarded as an attempt to conceal information. This view is also supported by the first Revenue official in his note of 13 November 1997 when he said that the fact that Mr Smith had shown his residence as his daughter's address is not so unreasonable as he would regard it as her family home.

When the case was selected for audit, the Control Officer met with Mr Smith in June 1997. In his report he noted that Mr Smith informed him that his daughter had gone to stay in a Dublin nursing home for a couple of days and at times stayed in the local nursing home rather than at home and that he took her on drives from time to time.

In September 1997, in interviews with staff from the nursing home, the Control Officer noted that Mr Smith transported his daughter to a day care centre and that he observed him doing so and that at weekends and holiday periods her father was responsible for her transport. The Control Officer's report does not indicate to me that Mr Smith tried to conceal the fact that his daughter was in the nursing home. He readily acknowledged the fact when asked and added that she had spent some time in the Dublin nursing home. Neither did he exaggerate the position with regard to the extent to which he was responsible for the transport of his daughter. In fact on the basis of the Control Officer's reports it is clear that his statement 'that he took her on drives from time to time' is an understatement rather than an exaggeration based on the information contained in a later report of the Control Officer. The Revenue official's second reason, and the one he regarded as the more important of the two, as to why the Duffy case differed from the Smith case, related to the documentary evidence produced concerning medical circumstances. This evidence, in the form of a letter from a Senior Social Worker, confirmed the statements made by the parents in respect of their son's medical circumstances and made a very strong case with regard to the importance of trips home. In the case of Mr Smith's daughter, no equivalent evidence was produced. It is true to say that there was no equivalent to the Duffy letter in the Smith case. However, this is not to say that Mr Smith would not have been able, if requested, to provide equally compelling evidence regarding the circumstances of his daughter's stay in the nursing home and the importance of trips home, to the day care centre and for leisure purposes.

In the case of Mr Kelly, his wife was resident in a nursing home on a long-term basis. As in the Duffy case documentary proof could have been provided, if Revenue had so requested, of the circumstances of his wife's stay in the nursing home and the importance of trips outside the nursing home to support the waiving of the residency requirement.

The factors which influenced the decision to waive the residency in the Duffy case would also have been present in the Smith and Kelly cases. In neither the Smith nor the Kelly cases, however, were the applicants asked to present a case for a waiver of the residency requirement on the lines applied in the Duffy case. In my view, there is a compelling case for Revenue to make public the factors which it considers important in the exercise of the residency waiver. This is also a legal requirement under the Freedom of Information Act, 1997.

The treatment by the Office of the Revenue Commissioners of the applications made by Messrs Smith, Dunne and Kelly.

In the Charter of Rights published by the Revenue Commissioners, they state that their clients are entitled to expect that at all times their staff will carry out their duties courteously and considerately and that their clients will be presumed to have dealt with their tax affairs honestly. Clients are also told to expect that every reasonable effort will be made to give them access to full accurate and timely information about Revenue law, and their rights and obligations under it, and to advise them of their right to object to a charge to tax or duty, if they consider that the law has been applied incorrectly and to have their case reviewed.

TEST

Revenue reject Mr Dunne's application "Dear Mr Dunne, I refer to your application under the Disabled Drivers and Disabled Passengers (Tax Concessions) Regs 1994 in respect of a vehicle for transporting your mother Mrs Elizabeth Dunne as a disabled passenger. It is a fundamental requirement for relief under the above regulations that the applicant is resident with the disabled passenger in question. Following a routine audit of your application it has been established that your mother is not resident with you, despite your declaration to the contrary on application form DD1. Accordingly your application for relief is refused. It is a serious offence to make a false declaration to obtain tax relief and the Revenue Comissioners would be justified in instituting legal proceedings against you. In this instance, this course of action is not being pursued at present. However, I must warn you that similar leniency will not be shown in future. I am enclosing leaflet C&E 6 for your information."

TEST

The correspondence which issued to the complainants from Revenue refers to the fact that each individual was deemed not to qualify under the Disabled Drivers and the Disabled Passengers (Tax Concessions) Regulations and that they had a right of appeal. The correspondence also makes reference to

(i) the possibility of legal proceedings being initiated (Smith and Dunne);

(ii) the possibility of vehicle seizure (Smith);

(iii) the fact that it is a serious offence to make a false declaration to obtain tax relief (Dunne);

(iv) that it was a fundamental requirement that an applicant resided with the disabled passenger (Smith and Dunne and Kelly).

The explicit threats referred to at (i), (ii) and (iii) indicate that Revenue failed to meet its own stated commitments in respect of their clients' entitlement to courtesy, consideration, a presumption of honesty and a right of independent review. In addition, the information contained in (iv) contradicts the commitment to provide full accurate and timely information about Revenue law as, contrary to what was conveyed to the complainants in correspondence from the Revenue Commissioners, it is not a fundamental requirement that the applicant resides with the person with disabilities because the Regulations provide that this requirement can be waived.

TEST

Revenue reject Mr Kelly's application "17/09/1998 Dear Mr Kelly, I refer to your application for a repayment of VAT and/or VRT on a vehicle under The Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994. Under the above regulations, where a claim is made by a family member for a Disabled Passenger, that family member must be residing with and be responsible for the transport of the Disabled Passenger. As you do not reside with the Disabled Passenger, it is regretted that the Revenue Commissioners are not in a position to authorise a payment in this instance. If you wish you may appeal this decision, see C&E 6 enclosed. Please note that the above address is Freepost"

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