Appeals, Tax Disputes & Tax Tribunals
Most tax enquiry issues are settled by negotiation and agreement. But when a taxpayer and HMRC cannot agree on an issue there are various appeals processes available to resolve matters: including the Tax Tribunal, Internal Review and Alternative Dispute Resolution.
The so-called Statutory Review (aka "Internal Review") is an HMRC led mechanism whereby another tax officer - working in HMRC’s Solicitors Office and Legal Services directorate, and not previously involved with the case, and not within the same line management structure as the original Enquiry caseworker - can consider matters: theoretically with fresh eyes and an impartial mind. A Statutory Review can be a very useful method of resolving a dispute, particularly where it seems that the tax investigator is misinterpreting the key facts, or applying the tax law incorrectly. We have experienced a high degree of success at this stage: although some Review Officers are not as impartial as we should expect.
As a next step, or alternatively, there is the formal appeals process to the Independent First Tier Tribunal (aka the Tax Tribunal). This is the standard way to dispute the taxman's assertions: where the normal negotiation process has run out of road. The Tax Tribunal service is entirely independent of HMRC. Its impartial Judges hear evidence from both sides - usually in a formal courtroom style. The decisions are legally binding. The highly formal nature of the proceedings mean that Tribunal cases are usually best handled by specialists. HMRC officials frequently try to scare off taxpayers from going to the Tribunal - suggesting the process is mysterious and intimidating. It needn’t be, if you are properly represented. The impartial Tax Tribunal Judges are scrupulously fair; and frequently find in favour of the taxpayer. Also, it is not uncommon for HMRC to back down at the last minute - when they see a taxpayer’s representative is experienced, organised and determined. However, thorough preparation is required, and the process itself is convoluted.
Both of the routes above give excellent opportunities for the well represented taxpayer to accelerate the pace of any Tax Enquiry or dispute; overcome HMRC intransigence; and to have their case heard by an impartial, objective, decision maker.
Alternative Dispute Resolution
Where the relationship with the investigating tax inspector has broken down, then the ADR route can be useful to move things forward. This is usually adopted prior to the Statutory Review or appeal to the Tax Tribunal. A so-called "independent" HMRC employee "facilitator" is used to try and restore the communication process, and accelerate the settlement of the case. The HMRC facilitator cannot decide the outcome of any dispute. They can simply advise both sides (i..e their HMRC colleague and the taxpayer) on the best way to break the log-jam, and progress matters. It can be useful if you feel the compliance officer is just not listening to you, or keeps misunderstanding you. But it won't be very useful where the inspector clearly disagrees with your interpretation. It may overcome a particular sticking point: but is unlikely in iteself to resolve the whole Enquiry. And if you are represented by an experienced tax enquiry specialist it will be rare for you to have to resort to the ADR. Also many reports of the ADR system mention a perceived lack of impartiality of the facilitator.
The Adjudicator and Ombudsman
The Adjudicator and The Ombudsman are two different offices (independent of HMRC), and are there to help taxpayers who are unhappy with how the taxman is treating them. They can investigate complaints, and award compensation. They are pretty much a last resort, and are really only appropriate where HMRC are acting unreasonably. These are not the best forums for resolving disputes about key facts. They can be very helpful in appropriate cases: with HMRC losing the majority of the time. More information about them can be found in our FAQ: What are the Adjudicator and Ombudsman?
What does it mean for me?
If you have a tax dispute or long running tax enquiry there are 3 main methods for bringing matters to a conclusion. The ADR is useful where you feel you are banging your head against a brick wall, or feel that you are speaking a different language to the inspector. Although many accountants report finding the process unhelpful and time-wasting, and have complained about the facilitators being too pro-HMRC. The Statutory Review will bring a fresh pair of HMRC eyes to the situation, where you feel the tax officer is getting it wrong. The Reviewing Officers are not always as impartial as we should expect, but do tend to cover the key issues thoroughly. The Tribunal Appeals process will bring a wholly independent and objective judgment: but success requires a lot of preparation (and therefore cost).
Success at any stage depends on the quality of the fact finding; presentation skills; and technical knowledge of your tax adviser - and their ability as an advocate. Where worthwhile sums are at stake it’s always worth engaging skilled and experienced specialist professionals to prepare and present your case.
How can Lynam Tax Dispute Experts help me?
Lynam Tax Enquiry Experts have been highly succesful at Statutory Reviews. We have also prepared for many Tribunal hearings, and the process has usually meant HMRC conceding before the formal meeting. We have also successfully presented cases at formal contentious Tribunal hearings. We are currently assisting a number of clients through these processes. We will fight your corner tenaciously, but also with the subtlety and skill honed from 90 years’ real experience.
If you need advice and help in a contentious tax dispute call:
Paul Lynam : 0845 643 9997 or
Andrew Nutbrown : 0771 877 8710
or email email@example.com
For more information about the Tax Tribunals and Internal Reviews see our news articles:
New Appeals Process in Tax disputes: the Tax Tribunals.
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