How SME Business Owners and Private Individuals Can Appeal HMRC Tax Decisions to the Tax Tribunal: Updated Guidance for 2024
We have updated this blog, originally written in 2015, about how small to medium-sized (SME) business owners and private individuals can appeal HMRC’s tax decisions against them. This blog aims to outline how to appeal to the tax tribunal if you disagree with HMRC’s response to your appeal review.
Overview of the Tax Tribunal
The tax tribunal is an independent body, separate from HMRC, that handles appeals against decisions related to both direct and indirect taxes. Direct tax issues include income tax, corporation tax, and PAYE tax. On the other hand, indirect tax issues encompass excise duty and VAT surcharge. This independence is crucial as it ensures that your case is judged fairly, without any bias from HMRC.
Direct Tax Issues
Before you can appeal direct tax decisions to the tax tribunal, HMRC must first conduct a review. If the review does not resolve the issue to your satisfaction, you can proceed to appeal to the tribunal. This process begins with notifying HMRC of your intention to appeal, after which they may offer an internal review of the decision. Should the review uphold the original decision, you can then take your appeal to the tribunal. It’s essential to prepare thoroughly for this stage, gathering all necessary documentation and understanding the specifics of your case.
Your accountant can manage the appeal process on your behalf, although your presence will be required at the hearing. This ensures that you can personally clarify any points and provide firsthand evidence, making your case more robust. Having your accountant act as your representative can provide a strategic advantage, as they bring expert knowledge and experience to the proceedings.
Seized Goods
If your goods are seized by the UK Border Agency or HMRC, you can appeal this decision as well. This is particularly relevant for SME business owners who may face penalties as a result of such seizures. Similar to direct tax issues, you must first request a review of the decision to seize your goods before appealing to the tax tribunal. This step is crucial as it provides an opportunity to resolve the issue without going to tribunal, saving time and resources.
The review process involves HMRC reassessing their decision based on any new evidence or arguments you present. If the review does not change the outcome, you can then proceed to the tribunal. Preparing a comprehensive case with detailed evidence and clear arguments can significantly impact the success of your appeal.
Your Hearing
If your appeal leads to a hearing, you will receive fourteen days’ notice of the date. The location of the hearing will be chosen based on its accessibility from your home or place of work. This consideration ensures that attending the hearing is as convenient as possible, reducing additional stress and logistical challenges.
During the hearing, it is essential to present your case clearly and concisely. You will have the opportunity to explain your position, present evidence, and respond to any questions from the tribunal panel. The more organized and well-prepared you are, the better your chances of a favourable outcome.
Who Will Attend
You may bring a representative, usually your accountant, along with an additional individual such as a family member or colleague. The hearing will include the tribunal panel, a tribunal clerk, a representative from the department or agency you are disputing (e.g., HMRC or the UK Border Agency), and any witnesses to the case. Having a supportive team can help alleviate some of the pressures of the hearing and provide emotional and strategic support.
What Should You Take
Bring as much relevant paperwork as possible to your hearing. This is crucial for presenting a strong case. Ensure you have:
The ‘statement of case’ document delivered by HMRC.
All documents and paperwork necessary to support your case. Consult with your accountant to determine what is needed; it is better to have too much documentation than too little.
Your written response to the statement of case, including a list of the documents and paperwork you will be presenting.
Typically, you, the business owner, will present your case first to the tribunal panel. Afterward, the representative from the agency you are disputing will present their side. The tribunal will then make a decision. This structured approach ensures that both sides have a fair opportunity to present their arguments and evidence.
Procedural Updates and Digital Submissions
Significant advancements have been made in digitising the appeals process. The introduction of the HMCTS Document Upload Centre allows for the submission of tribunal document bundles electronically, facilitating more efficient case management and reducing delays caused by traditional postal services. This digital advancement has been particularly beneficial for handling large document bundles that exceed email size restrictions, making the process more streamlined and accessible.
Changes in Handling Vulnerable Cases
In response to the complexities faced by families of individuals who lack mental capacity, there have been procedural updates to simplify access to tax tribunals. A streamlined process now allows families to handle cases involving small sums of money without the need for lengthy court proceedings. This change aims to balance accessibility with the necessary safeguards against financial abuse, ensuring that vulnerable individuals are protected while making the process less burdensome for their families.
First-Tier Tribunal Procedures
The First-Tier Tribunal is where most tax appeals begin and end, making it crucial to present a compelling case from the start. A typical hearing involves presenting evidence and witness testimonies, with both sides given the opportunity to cross-examine witnesses. Decisions can be reserved, with written judgments provided later. This process is designed to ensure a thorough and fair evaluation of all evidence presented.
Applicants can initiate proceedings by notifying the tribunal using an online form. While it is generally advisable to allow HMRC to conduct an internal review first, taxpayers can proceed directly to the tribunal if the review upholds the original decision. This dual-step process is designed to resolve disputes at the earliest possible stage, reserving tribunal hearings for more complex or contentious cases.
Costs and Appeals
There are no fees for filing an appeal in the First-Tier Tribunal, and each party bears its own legal costs. The tribunal does not usually award costs against the losing party unless there has been unreasonable behaviour or wasted costs. If a party disagrees with the tribunal’s decision, they can request permission to appeal to the Upper Tribunal, focusing on errors of law rather than factual disputes. This appeal must be lodged within 56 days of the decision, ensuring a timely resolution to disputes.
Losing Your Appeal
Regardless of whether you receive your decision on the day of your hearing or later, you will always receive an official letter from the tax tribunal with the decision in writing. If you lose your appeal, you have two options:
Ask the tribunal to reconsider the case if there were procedural issues, such as not receiving important paperwork.
Request permission to appeal the decision if you believe there was a legal error, such as the incorrect application of the law.
Do You Need Help with How to Appeal to the Tax Tribunal?
If you are an SME business owner or private individual looking to discuss appealing tax decisions to the tax tribunal, contact us today on 020 8780 2349 or get in touch with us via our contact page to speak with a professional and arrange a complimentary, no-obligation meeting.
We can provide you with tailored advice and guidance to navigate the tax tribunal process effectively, ensuring that you are well-prepared and have the best chance of achieving a favourable outcome.