An unpublished decree handed down by the Administrative Review Tribunal has turned the law involving additional tax on its head, giving taxpayers the right to be presumed innocent – the opposite of the approach normally applied to tax cases.

This decision will have a bearing on the pending caseload of around 200 tax cases. Robert Attard, an EY Malta partner and EY’s tax policy leader for central southeast Europe, believes it will make it much harder for the tax authorities to prove their cases as in the past, it was up to the taxpayer to prove their assessment was wrong.

“Not many cases actually end up in court but it stands to reason that those that do are usually the ones involving larger amounts. This will help taxpayers immensely as they will now be presumed innocent,” he said. In criminal cases, there are strong procedural guarantees which ensure that a person is innocent until proven guilty – with the burden of proof on the prosecution – and has the right to remain silent.

However, in tax cases, the burden of proof is on the taxpayer, and the assessment made by the tax authorities is presumed to be correct. The taxpayers’ right to silence does not apply, and although onus of proof is on the appellant, their right to bring evidence is restricted.

Tax cases involve the tax that should have been paid but which was not, and additional tax, the penalty for not paying tax in time or for not declaring income. In practice, virtually all tax cases involve additional tax.

The change in interpretation goes back to the landmark 2012 Constitutional Court judgment on the Geranzi case, which said that additional tax was the equivalent of a criminal charge. Academics and experts had even then realised that this meant tax cases would have to follow the procedural guarantees of criminal cases. But it was not until recently that this point was actually recognised in a judicial context.

Magistrate Gabriella Vella, in a VAT case some weeks ago, referred to the interpretation of the Constitutional Court on additional tax being considered as a “punitive measure” and therefore something that fell under criminal and not tax law.

This means, she said, that the taxpayer had the right to remain silent and that it was up to the VAT director general to prove that the taxpayer had not paid all his dues.