Understanding Tax Tribunals | First-tier Tax Tribunal and Upper Tribunal
This article outlines the tax tribunal process, starting with the First-tier Tax Tribunal for challenging HM Revenue & Customs (HMRC) decisions. It also covers the statutory review process, which allows reconsideration without litigation, and details the appeal procedure to the Upper Tribunal for further examination.
The function of Tax Tribunals, which are independent of Government, is to hear appeals against decisions concerning tax liability made by bodies such as:
- HMRC
- Welsh Revenue Authority
- Border Force
- National Crime Agency
- Gambling Commission
They operate in a manner similar to courts of law but apply their own rules of procedure. The Tribunals, Courts and Enforcement Act 2007 created two levels of tribunal being ‘the First-tier Tax Tribunal’ and ‘the Upper Tribunal’. These Tribunals form no part of HMRC and operate totally independently.
Tim Thompson of KANGS comments upon the operation of the Tribunals.
First-tier Tax Tribunals
Tribunals, in reaching a decision, consider all the evidence, both oral and written, presented by both sides and may call witness evidence.
They hear Appeals against decisions in respect of both ‘direct taxes’ and ‘indirect taxes.’
Direct taxes cover:
- Income tax,
- PAYE,
- Corporation Tax,
- Capital Gains Tax,
- National Insurance Contributions,
- Statutory Sick Pay,
- Statutory Maternity Pay.
Any appeal relating to disputes involving direct taxes must be made to HMRC before any appeal to the First-tier Tax Tribunal can be considered.
Indirect taxes include:
- VAT,
- Excise duty,
- Customs duty.
Decisions involving indirect taxes can normally be presented straight to the First-tier Tax Tribunal. However, it may be more effective to initially apply for a Statutory Review.
Statutory Review
A statutory review can be used by those who disagree with a tax decision made by HMRC. It allows them to request HMRC to re-examine their decision.
A review of this nature involves an HMRC ‘Review Officer,’ being a person from a different HMRC team to that which made the decision being appealed, considering the decision or penalty being disputed.
Direct taxes
This procedure is only available following an Appeal to HMRC.
Indirect taxes
HMRC will offer the opportunity for such a review when advising of its decision or penalty.
Adopting this procedure would provide a quicker and cheaper resolution and an Appeal to the First-tier Tax Tribunal can still be made if the outcome of the Statutory Review is not accepted.
Such an Appeal must be made within thirty days of the date of the review result letter.
Matters of Note:
- There are no fees required in order to issue a tax appeal.
- The Tribunal’s decision, if not given on the day of Hearing, will generally be given in writing within one or two months (or longer in complex cases) depending upon the discrete circumstances of the Hearing,
- At the Hearing, it is the duty of the person making the Appeal to demonstrate why the assessment, penalty or decision was wrong and to produce the appropriate supportive evidence.
- Should the Appeal fail, the Judge’s permission to appeal to the Upper Tribunal must be sought in writing within fifty six days setting out the reasons for the application.
Appeal to the Upper Tribunal
Most tax appeals are dealt with entirely by the First-tier Tax Tribunal. However, with the Judge’s permission an appeal to the Upper Tribunal may be allowed.
It is essential to note that costs are generally awarded to the successful party. Accordingly, should the Appeal fail, liability for the opposing party’s costs may well be substantial.
How Can We Assist?
KANGS Solicitors provides a wealth of experience of knowledge gained from assisting clients over many years who have been subjected to investigation by HMRC or otherwise engaged in disputing tax assessments of every nature.
Contact us today using the details below, our team is here to assist you with any investigation, assessment, or tax related concerns you may have. We would be delighted to help.
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through live conferencing or telephone.
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