Advice on Appeals, Commissioners and Tribunal Hearings

All HMRC enquiries and checks are subject to appeal and it is often possible to appeal against use of information powers. Penalty demands can also be appealed and if an enquiry is dragging on taxpayers have a right to seek a closure notice to try and bring the enquiry to an end. Decisions on employment status are also subject to appeal.

But it is a serious matter to take on HMRC at an appeal hearing. HMRC has created Appeals Units throughout the UK. These are composed of Inspectors, some of whom are trained and qualified barristers and advocates although most are not. These teams specialise in taking appeals and as a consequence HMRC’s performance before tribunals has become considerably more professional and accomplished. For the most important appeals HMRC will engage Counsel to represent them but the vast majority of cases are handled by the local Appeals Unit.

Historically tax appeals were heard by either the General or Special Commissioners. The General Commissioners were based in localities throughout the UK, were composed of local business people and advised by a Clerk who was usually a lawyer. Their hearings tended to be informal. The Special Commissioners were all lawyers with considerable tax experience and usually heard the larger issues and more complex appeals.

However, from April 2009 the Commissioners and the VAT & Duties Tribunal are to be replaced by the First Tier Tribunal. To coincide with the tribunal changes HMRC are also introducing a new statutory review where taxpayers will have a right to ask for an internal review of HMRC’s decision before considering whether to send an appeal to the tribunal. HMRC say the review will be carried out by a specialist reviewer who will be outside the line management chain of the decision maker. If taxpayers do not agree with the review decision they will still be able to send an appeal to the tribunal.

The vast majority of appeals will be heard in the First-tier Tribunal. Appeals will be classified according to their complexity and different procedural rules will apply. From 1 April the tribunal plans to introduce a new paper track for many straightforward appeals, such as appeals against a penalty notice for failure to submit a monthly or end of year return. In these cases the tribunal will make its decision based on written representations from both the appellant and HMRC.

But taxpayers can always ask for an oral hearing if they prefer. Decisions of the First-tier Tribunal may be appealed to the Upper Tribunal and beyond that to the Courts.

No costs will be awarded in the vast majority of cases. The tribunal will have power to award costs where either party has behaved unreasonably. In the last year or so HMRC Appeal Units have been requesting costs where, for example, a taxpayer does not turn up for a scheduled hearing. The tribunal will also be able to award costs in complex cases unless the appellant indicates before the hearing that they do not want costs to apply.

The new review process could be a useful tool and taxpayers will want to make sure their case is presented as clearly as possible.

From 1 April taxpayers will be able to lodge their request for a tribunal hearing directly with the Tribunals Service - HMRC will not be able to list appeals for hearing

The panels hearing tax appeals in the new tribunal will be drawn from a pool of professionals, both legally and non-legally qualified, with a wide range of experience, skills and knowledge. So it will be quite similar to the General and Special Commissioners .

Expert advice is necessary when deciding whether it is worth taking your case to a formal appeal before the Tribunal.  And expert assistance is essential at any appeal hearing. If the matter is very complex you may engage Counsel. In all other cases you will need specialist help capable of presenting your case to the best effect.

Iain Macleod has conducted cases before the Commissioners for both HMRC and taxpayers, and can advise you on the merits of your appeal or take it for you. Our approach is non judgmental and geared to achieving the best result for you as quickly as possible.  While we aspire to a productive relationship with Inspectors of Taxes we will present your case vigorously and robustly.  At all times you will be kept informed of developments and options for settlement will always be clearly explained to you.

For further information please contact Iain Macleod on 0115 983 5580 or mobile 07920 146800 or email Iain at imacleod@edftax.co.uk