New Appeals Process in Tax disputes from 1st April 2009: the Tax Tribunals

When a taxpayer and HMRC cannot agree on a disputed issue there is a formal appeals process to resolve matters.  Major changes to the tax appeal procedures take place from 1st April 2009.

The existing General and Special Commissioners and VAT Tribunals will be replaced by two- tier Tribunals, administered by the Ministry of Justice.  At the same time HMRC are introducing an Internal Review procedure which can be used instead of, or in conjunction with, the full Tribunal regime. Both systems 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 from an impartial, objective, decision maker.

Internal Review

In any Tax dispute or contentious situation the taxpayer can request that HMRC carry out an Internal Review.  Also, Internal Reviews are a mandatory first step in the formal appeal process against a direct tax (i.e. non VAT) decision.  If a taxpayer chooses an HMRC Internal Review in the first instance he can then appeal against the decision of the Internal Review to the Tribunal.

The Internal Reviews will be carried out by experienced HMRC staff normally be conducted unconnected with the initial decision.

HMRC have to complete Internal Reviews within 45 days, unless a different time period is agreed. In that period the taxpayer can put forward further information but cannot ask for the case to be heard by the Tribunal until they have been notified of the Internal Review outcome.

Appeals to the Tax Tribunal

Whether you are appealing to the Tax Tribunal following an Internal Review decision, or appealing direct to the Tribunal, appeals have to be made to the Tribunals Service, in writing, within 30 days of either the original decision or from the date of notification of the Internal Review decision.

There are two tiers in the Tribunal system.  The Tribunal President is responsible for allocating cases. The first-tier Tribunal (Tax Chamber) will hear nearly all tax appeals; replacing the General and Special Commissioners and VAT Tribunals.  Greater use will be made of “paper hearings” – where both sides will make representations to the Tribunal in writing. The Upper Tribunal is a Court of Record with jurisdiction throughout the UK. A very small number of the most complex cases may be referred straight to the Upper Tribunal, which will also deal with appeals from, and enforcement of, decisions of the first-tier Tribunal.  Appeals to the Upper Tribunal will require permission and in most cases will be on a point of law. Appeals from the Upper Tribunal can then be made to the High Court and can progress in the usual way to the House of Lords and the European Court of Justice.


Costs will not normally be awarded. But, the Tribunal will have powers to make an order for costs where either party has behaved unreasonably. Costs can also be awarded in complex cases.  The taxpayer can opt out of the option for costs at the outset, but will not get their own costs paid if they win.

Payment of tax during Internal Reviews and Appeals

When a direct tax decision is being disputed a request can be made to postpone part or all of the tax due, until the appeal has been settled.  Interest will accrue on any unpaid balance that is subsequently found to be due.

In VAT cases any disputed tax will not normally be collected during an Internal Review.  However, before any appeal can be heard by the Tribunal, any disputed tax will normally have to be paid.  This unfair practice is similar to the current procedure.  At the moment HMRC do not usually enforce payment in cases where a taxpayer can demonstrate it would cause “hardship”.

Transitional arrangements

Internal Reviews are available for direct tax appeals which are already underway at 1st April 2009, unless the case is already within the jurisdiction of the General or Special Commissioners.

What does it mean for me?

If you have a tax dispute or long running tax enquiry there are now two methods for bringing matters to a conclusion.  The Internal Review will bring a fresh pair of eyes to the situation and the Appeals process will bring an independent and objective judgment.  Success at either stage depends in 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 is always worth engaging skilled and experienced specialist professionals to prepare your case.  Lynam Tax has prepared for many General and Special Commissioners’ hearings and the process has usually meant HMRC conceding before the formal meeting.  We have also presented cases successfully at formal contentious hearings.  We are currently acting in a number of Tribunal hearing cases.

If you need advice and help in a contentious tax dispute call Paul Lynam now on 0845 643 9997 or email