Insights

As the level of effort undertaken by HMRC to recoup underpaid taxes from taxpayers has increased, so too have the numbers of people wishing to dispute tax payments and the associated penalties due. HMRC relies on a wide range of direct and third party sources to obtain the data it needs to identify possible ‘offenders’ and this means it cannot always get things absolutely right. Computers make processing errors, mistakes are inevitably made and taxpayers are entirely within their rights to appeal against any decision if they do not agree with it.

For example, you may have been involved in a tax enquiry into a suspected underpayment of personal tax, VAT or corporation tax and do not think the amount HMRC is requesting in penalties and/or underpaid tax is correct. Or you may have been charged an automatic penalty for non-compliance, for which you believe you have a reasonable excuse. Alternatively, you may have received a request for information that you do not believe you should have to comply with.

When making an appeal against direct taxes you have statutory rights and there are procedures to follow. If you appeal against a decision, your appeal will automatically be passed for review within HMRC to someone who has not been involved in the decision. They may overturn the decision but if, on review, the decision made by HMRC is upheld, you then have the option of appealing to the First-tier Tax Tribunal which is part of the UK court system. These hearings are similar to bringing a legal dispute to court, with defendant and appellant each given the right to state their case. A judge and tax member with specialist experience will hear the case impartially and will make the final legally binding decision.

What can taxpayers appeal against?

If you disagree with a decision made by HMRC, in most cases you can appeal against it. For example this may be a claim for additional tax following an enquiry into your affairs, the imposition of penalties which you believe to be unfair, or a request for information which you believe to be excessive.

What to expect from the appeals process

• If you are unwilling to accept a decision made by HMRC, you have the right to request a review of the case. An HMRC officer who has no previous exposure to your case will then carry out a review - this ensures the decision-making process is impartial and the review is usually carried out within 45 days of your request;

• If you do not agree with the outcome of the review, you are entitled to further appeal to the First-tier Tax Tribunal. This appeal must be made within 30 days of the review decision;

• Attending an appeal hearing can be stressful because it is necessary to present your case professionally on the day, or perhaps to provide a witness statement and appoint a professional adviser to present the case on your behalf.

A note of caution

Although it is possible to pursue an appeal personally, it can be a complex area to navigate without specialist support. In fact it may be possible for a specialist with experience of handling HMRC appeals to secure a positive outcome without the need to attend a Tribunal.

Bringing a case to Tribunal can be a costly process. In addition, you may not have a comprehensive understanding of your rights, the timescales you must act within, or the procedures to follow. In turn, this may result in an appeal which may otherwise have a good chance of success, being rejected.

If you would like to appeal against a decision or a request for information made by HMRC and need expert advice please contact Lesley Stalker by emailing las@rjp.co.uk.