June 15th, 2011
Judicial Review is a type of court proceeding in which a judge reviews the lawfulness of a decision, action or failure made by a public body (such as HMRC). It is usually the last resort in challenging the taxman’s Decisions.
Judicial Reviews are a challenge to the way in which a decision has been made, rather than the merits of the conclusion itself. In other words, it is not really concerned with whether the conclusion is the right one. The courts will not overturn HMRC’s decisions on Judicial Review if the correct procedures were followed; even if the courts would have come to a different conclusion.
The courts expect Judicial Review to be a last resort and expect parties to use Alternative Dispute Resolutions first (e.g. discussion, HMRC complaints procedure, Internal Review, appeals to the Tax Tribunal, Revenue Adjudicator, Ombudsman). So Judicial Review may only be used where there are no alternative appeal routes available.
An application for Judicial Review must be filed no later than 3 months after the grounds to make the claim first arose.
Taxpayers can use Judicial Reviews to challenge statutes, assessments, determinations, notices, Information Notices, penalty determinations, and the failure by tax officers to act in accordance with previous advice or guidance, i.e: a breach of a person’s Legitimate Expectation.
A decision made by HMRC can be challenged on grounds of illegality (e.g. acting beyond the powers conferred by law), irrationality (e.g. acting so unreasonably that no other public body would act in the same way), and procedural impropriety (e.g. actual or apparent bias, refusal of the right to a fair hearing, general unfairness, and abuse of power).
A breach of a taxpayer’s Legitimate Expectation can amount to unreasonable behaviour and therefore be an abuse of power.
Applications have to be detailed in writing to the court. They may subsequently be “renewed” at an oral hearing if the paper application is unsuccessful. If permission is granted then the case is heard at a substantive hearing.
A successful Judicial Review claim means the public authority has to make a fresh decision, taking into consideration the views of the court. However, the new lawful decision could still be unfavourable.
The Upper Tribunal (of the Tax Tribunal) has jurisdiction to hear Judicial Review proceedings in cases where the High Court (in Scotland the Court of Session) transfers the proceedings to the UT and in cases where there is an application for Judicial Review lodged with the UT on a challenge to a First Tier Tribunal decision.
Judicial Review is generally considered to be cumbersome, complex, lengthy, expensive and uncertain. On the whole it has been the preserve of big business and the super-rich.
How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries. We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997
June 1st, 2011
Where taxpayers and the taxman cannot resolve a dispute by negotiation, a less formal and cheaper alternative to going to the independent Tax Tribunal (or a handy additional route of appeal) is HMRC’s Internal Review process. Taxpayers have a statutory right to an Internal Reviews if they want one. They are not compulsory. An Internal Review is available when HMRC issues an appealable notice of assessment or a Decision.
Direct tax appeals
Appeals in direct tax cases are made first to HMRC rather than the Tribunal. A Review can only be triggered when an appeal has been made against an appealable decision made by HMRC and when:
- the Tribunal the has not yet been notified of the appeal, then the taxpayer can ask HMRC for a Review; or
- HMRC can offer the taxpayer a Review.
Only the taxpayer can notify the Tribunal of an appeal, HMRC cannot. So offering an Internal Review is the only way HMRC can progress matters when negotiations are at stalemate.
Where the taxpayer asks for the Internal Review the taxman has to issue a Decision letter within 30 days of the request. The letter must set out HMRC’s views and state the tax they want. That letter triggers the start of the formal Internal Review period.
Where the taxman offers the Review, the taxpayer has 30 days to either:
- accept the offer of Internal Review; or
- appeal against the decision to HMRC and then notify the tax Tribunal of the appeal.
- If the taxpayer does nothing then the matter is treated as finally settled on the basis set out by HMRC, unless the taxman accepts a late application.
The normal timescale for an Internal Review is set at 45 days, but a different timeframe can be agreed between HMRC and the taxpayer.
Once HMRC has told the taxpayer its Review conclusion, the taxpayer can:
- or notify the appeal to the Tax Tribunal within 30 days of the Review conclusion letter.
- After 30 days an un-appealed Review decision is treated as being agreed, unless the Tribunal accepts a late appeal.
- Where HMRC do not complete the Review within the agreed period, then it’s treated as upholding HMRC’s Decision letter. HMRC must notify the taxpayer of this as soon as possible. The taxpayer then has 30 days to appeal to the Tribunal.
- The taxpayer can also notify an appeal directly to the Tax Tribunal: at any time between the original appeal and accepting the offer of a Review; or at any time between appealing and receiving HMRC’s latest view where a Review was requested; or within 30 days of either the Review conclusion letter, or the letter notifying that the Review has not been completed within the Review period.
Indirect taxes
For indirect taxes the Review must be offered at the same time as the appealable decision is notified to the taxpayer. The taxpayer can then accept the offer of the Review or make an appeal directly to the Tribunal, within 30 days of the notification letter. If the taxpayer is not satisfied with the outcome of the Internal Review an appeal can then be made, again directly, to the Tribunal.
How Reviews are conducted
Usually the Review Officer will be outside the direct line management chain of the original case worker or Decision-maker. The Review Officer’s role is to check if the Decision is in line with the law and HMRC’s technical guidance, policies and custom and practice. The Review officer has also to consider whether the case is one which HMRC would want to take to the Tax Tribunal (e.g. an important point of principle). The taxpayer can submit extra information to the Review Officer, although if that is substantial the Review Officer is likely to refer it back to the case worker or Decision-maker whilst asking the taxpayer to agree to an extended Review period.
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.
May 2nd, 2011
HMRC are responsible for investigating suspected crime involving all of the UK’s taxes. But the decision to bring a criminal prosecution is made by an independent prosecuting authority. Since January 2010, tax prosecutions have been conducted by the Central Fraud Group of the Crown Prosecution Service (CPS).
The CPS usually brings one or more of the following charges against alleged tax evaders:
- Fraud (s 1 Fraud Act 2006);
- False accounting (s 17 Theft Act 1968);
- Fraudulent evasion of VAT (s 72(1) VATA 1994);
- Fraudulent evasion of income tax (s 144 FA 2000);
- Common cheat
These offences all carry custodial sentences. Under the Fraud Act an offender could face a maximum of ten years in prison. The maximum penalty for common cheat is life imprisonment.
All defendants charged with a criminal offence make their first appearance before a Magistrates Court. In most cases of serious tax fraud the charge will be an ‘indictable’ offence, i.e. the case will be referred to the Crown Court by the magistrates for trial before a jury.
Lynam Tax Investigation Experts have a vast amount of practical experience in managing serious tax fraud investigations. If you are worried about a tax investigation we can advise you on the best course of action. If appropriate, we can help you manage any necessary disclosures. If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul Lynam today on 0845 643 9997
April 15th, 2011
From 1 April 2011, the concessionary “Equitable Liability” will be replaced by a new statutory, “Special Relief”. Equitable Liability applied where the tax liability assessed or determined was greater than the amount which would have been charged had the Tax Returns been submitted at the proper time, and evidence was provided of the correct liability.
Special Relief is a form of Overpayment Relief which can only apply to amounts charged in HMRC determinations for income tax or corporation tax self-assessments where no other statutory remedy is available.
A person who has received a notice to file a return must do so by the filing date. If they don’t, HMRC can issue a determination of the tax due. That tax is then legally due to be paid. There is no right of appeal against a determination. Sending in a Tax Return within the time limit will displace the determination. However, if these time limits are passed a person may, claim Special Relief, if HMRC have made a determination and
- the person is out of time to make a return, and
- they are unable to claim Overpayment Relief.
There is no time limit for claiming Special Relief. Unlike claims to Overpayment Relief, Special Relief is not automatically excluded whenever:
- A person ought to have known that they had some other means of correcting an overpayment or over-assessment, but they failed to use those other means within the relevant time limit; or
- HMRC has already taken court action to recover amounts due under a determination, unless the person was present or was legally represented during the proceedings, or an agreement was reached to settle the proceedings.
Additionally, the following requirements must be satisfied:
- In the opinion of the taxman it would be “unconscionable” for HMRC to seek to collect the tax charged, or refuse to repay it if it has already been paid.
- The person’s tax affairs are otherwise up to date or arrangements have been made to the satisfaction of HMRC, to bring them up to date.
- The person has not previously claimed Special Relief or Equitable Liability – whether or not relief was given. This may be disregarded in exceptional circumstances.
HMRC say it would only be “unconscionable” to seek to collect the tax charged in the following exceptional circumstances: Where taxpayers -
- are suffering from a temporary or sporadic illness, including mental illness, and consequently find it particularly difficult to engage with the tax system;
- have not received notices or other communications for reasons outside their control, or
- are insolvent and pursuing the amount in the determination would be to the detriment of other creditors.
For a claim to Special Relief to be successful, it must, among other things, explain why the taxpayer considers that it would be unconscionable for Her Majesty’s Revenue & Customs to recover the full amount charged by a determination. The taxman defines “unconscionable” as meaning “completely unreasonable” or “unreasonably excessive”. In considering whether something is unconscionable HMRC will look at what behaviour it expects from any reasonable person in a similar situation. HMRC say Special Relief will not normally apply where taxpayers:
- are registered self employed and close the business but don’t tell HMRC;
- cease self employment and move but don’t provide a forwarding address;
- are subcontractors who suffer deductions under CIS and, believing they have nothing further to pay, do not respond to determinations and other contacts.
- are negligent and, although aware of their responsibilities to pay tax and to file returns on time, fail to act appropriately in relation to their tax affairs and ignore all communications sent to them.
A Special Relief claimant must
- confirm that their tax affairs are otherwise up to date, or
- make arrangements with HMRC to bring any other outstanding matters up to date.
Fixed penalties for late delivery of an SA return are still payable following a claim for Special Relief. For years up to 2009-10, the penalty is capped at the total amount of the tax chargeable where it is less than £100. Any daily penalties imposed for non delivery of a Self Assessment return are also not disturbed by a claim for Special Relief; even when the revised tax is reduced to nothing. But if daily penalties are disproportionate to the amount payable, then they can be disputed outside the Special Relief Claim process.
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.
April 6th, 2011
For the current tax year (2011/12) HMRC can raise assessments to income tax and capital gains tax:
- For 2009/10 normally on the anniversary of the date the return was filed, onwards in the absence of a discovery;
- For 2007/08 onwards if they can make a discovery, and even if there is only an innocent error;
- For 2005/06 onwards if they can show carelessness by the taxpayer or his or her agent;
- For 1991/92 onwards if they can show fraud or there has been a failure to notify chargeability or disclose a tax scheme within DOTAS.
How can Lynam Tax Investigation Experts help me?
Lynam Tax partners have a vast amount of practical experience in managing tax investigations and tax enquiries. We can advise you on the best course of action and if appropriate, help you manage any necessary disclosures, in order to obtain the optimum outcome for you, your business and your family.
*For a free, private, no obligation consultation, call Paul or Gemma Lynam today on 0845 643 9997
April 1st, 2011
If the taxman tells you that you have to send a completed tax return then there are penalties for not sending in the Return on time. The later the Tax Return is the higher the penalties. But penalties are not due if you have a “Reasonable Excuse”.
The taxman takes a hard line and usually tries to reject most excuses. However, the Tax Tribunals have laid down guidance which HMRC must follow. So HMRC have published their views of when they think a reason for late filing might be accepted by them as a Reasonable Excuse:
- an exceptional or unexpected event, beyond your control, that prevented you from sending your return on time. In this case, you must send your return as soon as possible once the problem ends.
- documents lost through theft, fire or flood that can’t be replaced in time
- life-threatening illness, for example a heart attack that prevents you dealing with your tax affairs
- death of a partner shortly before the deadline
- industrial action by Royal Mail over a lengthy period of time
- issues with the online service, with no work-round – you’ll need to provide the error message received
If you believe you have a reasonable excuse you can ask for a penalty to be reconsidered. You should tell HMRC as soon as possible – don’t wait until you receive the penalty. If the taxman doesn’t agree you can apply for Internal Review or appeal to the Tax Tribunal.
If you need advice and help in a contentious tax dispute call Paul Lynam now on 0845 643 9997 or email partners@lynamtax.co.uk
March 2nd, 2011
The taxman has now published further details of the new Managing Deliberate Defaulters programme, (MDD). This is a programme for HMRC to keep a close ‘watching brief’ on known tax evaders for up to 5 years following the closing of an investigation.
The key features of the MDD are:
- A defaulter is someone who deliberately pays the wrong amount of tax. Usually that will be someone who has incurred a tax-geared penalty for behaviour which falls in the ‘deliberate’ or ‘deliberate with concealment’ categories or were identified as deliberate evaders via criminal or Civil Investigation of Fraud proceedings, or via one of HMRC’s Tax Amnesty incentivised disclosure campaigns.
- Defaulters can be individuals, partnerships or companies.
- The taxman will decide who goes into the MDD programme.
- Taxpayers who have made a full unprompted disclosure and got the maximum penalty reduction will not be put on the programme.
- HMRC will tell taxpayers if they are subject to the Managing Deliberate Defaulters programme and will explain what is required of them.
- A defaulter will be monitored for between two and five years.
- Defaulters will come out of the programme once HMRC is satisfied that they are meeting their oblations and are no longer a high risk.
- The degree of monitoring will depend on the gravity and nature of the original offence.
- HMRC will monitor whether the taxpayer keeps their tax returns, payments, etc up to date.
- The taxman will check returns to see if they are accurate and to see that any errors or failings have been put right.
- Tax compliance officers may carry out further monitoring, e.g. making inspection visits (which might be unannounced), requesting further documentation to support returns, conducting in-depth compliance checks or checking with third parties (e.g. supplies or customers).
- Businesses in the MDD must provide full accounts (i.e. not three-line ones or the short version of the Self-employed pages) with their tax returns.
- There is no minimum figure of tax evaded for the taxpayer to be included in MDD.
- There is a £5,000 lower threshold for being asked to providing additional information alongside the return.
- Monitoring will extend across all the defaulter’s activities, not just the area where the evasion occurred. E.g. A builder who under declared rental income could have his Construction Industry Scheme records checked.
- If defaulters try to escape scrutiny by closing a business and starting a new one, HMRC can monitor the new business and/or the individuals who controlled the old one.
- If the taxpayer fails to meet the required standards, HMRC may use its formal powers to investigate, and could start criminal proceedings.
- There is no right of appeal against inclusion in MDD although the taxpayer can discuss it with the taxman or make a formal complaint.
- MDD can be used in addition to the power which HMRC has to publish details of deliberate defaulters where the tax lost is £25,000 or more (i.e. Naming and Shaming).
How can Lynam Tax Enquiry Specialists help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.
December 2nd, 2010
Where it has not been possible to resolve disputes with the tax authority by agreement, appeals against HMRC Decisions can be heard and determined by independent tribunals.
Lynam Tax experts can help you to prepare for, and present, your case at such a tribunal, in a manner which will maximise the likelihood of achieving a successful outcome. Our highly skilled negotiators have a clear understanding and practical experience of the presentation of cases before the tribunals.
By using our experts you will benefit from:
- a twin track of continuing to seek a negotiated outcome, whilst fully preparing for a hearing;
- avoiding the pitfalls of being under prepared or inadequately represented;
- thorough preparation of your case, from both a technical and tactical angles;
- a detailed knowledge of the complex procedures involved and of the powers of the tribunals, and how to use them to your advantage;
- freeing more of your time to concentrate on your business;
- peace of mind, knowing that your case is being handled by experts; and
- specialist support for your general practitioner accountant.
We will work with you and your advisors, as appropriate, to ensure that you and your case are fully prepared for a tribunal hearing. We also regularly work with external Tax Counsel when necessary and are qualified to instruct barristers directly.
We manage the whole process of preparing for a tribunal hearing, maximising the odds of a successful outcome.
Do I need specialist help with my tax appeal?
The taxman uses specialist ‘Appeals’ teams to lead its cases at Tribunal. Lynam Tax Dispute Experts have decades of experience in handling contentious tax appeals and can assist taxpayers and their accountants with the process; in order to achieve the optimum results.
*If you need help with a tax appeal call Paul Lynam now, for a confidential and no obligation discussion on: 0845 643 9997.
August 13th, 2010
There has been a long time debate about the difference between tax evasion (which is a crime) and Tax Avoidance (which generally is not). The taxman gave his view very neatly back in 1997 when the Chief Inspector at the time (John Gribbon) said:
“If an ‘avoidance’ scheme relies on misrepresentation, deception and concealment of the full facts, then avoidance is a misnomer; the scheme would be more accurately described as fraud, and would fall to be dealt with as such. Where fraud is involved, it cannot be re-characterised as avoidance by cloaking the behaviour with artificial structures, contrived transactions and esoteric arguments as to how the tax law should be applied to these structures and transactions.
Fraud is fraud, common cheat is common cheat and the application of tax law to ‘pretend’ situations is something of an irrelevance.”
Although HMRC could theoretically prosecute all tax fraud (including say a taxi driver putting a fiver in his back pocket) in fact they prefer to “take the money” and settle cases by way of a so-called civil settlement, rather than launching a criminal prosecution. The larger of these cases are dealt with under the Civil Investigation of Fraud (Code of Practice 9) procedures and guarantee non-prosecution, in return for full disclosure.
Lynam Tax Investigation Experts have a vast amount of practical experience in managing serious tax fraud investigations. If you are worried about a tax investigation we can advise you on the best course of action. If appropriate, we can help you manage any necessary disclosures. If you are facing criminal charges we can help you obtain first class legal representation, in order to obtain the optimum outcome for you, your business and your family.
For a free, private, no obligation consultation, call Paul Lynam today on 0845 643 9997
June 24th, 2010
Major changes to the UK taxation of so-called non-domiciliaries (non-doms) were introduced from April 2008. Many UK tax resident non-domiciled taxpayers want to know if they should pay tax on the arising basis (facing a UK tax bill on their worldwide income as it arises) or pay the £30,000 Remittance Basis Charge (RBC) and only be taxed on foreign income they bring into the UK in the year.
This is an extremely complex area. Tax experts seem to be in universal agreement that the new rules are overly complicated, ambiguous and make it virtually impossible for non-doms to comply with the reporting requirement with any confidence. If you are considering whether to pay the RBC then it may be worthwhile if the following conditions apply to you:
- You are non-domiciled;
- You have more than £2,000 of unremitted offshore income or gains;
- You have been UK tax resident for 7 of the preceding 9 years;
- You have offshore income of more than £75,000 or offshore capital gains over £175,000 (which have not been remitted to the UK). [Based on current rates of tax for 2009/10].
If the above conditions relate to you, or you are the beneficiary of an offshore trust, a shareholder of an offshore company, are UK domiciled but ‘not ordinarily resident’ in the UK, or are unsure whether to pay the RBC then you need specialist tax advice.
Lynam Tax domicile specialists have decades of experience in dealing with residence and domicile issues.
Call Paul Lynam today for a free discreet discussion on: 0845 643 9997
