Tax Tribunals & HMRC Out of Time Tax Appeals
We previously published and article entitled ‘Understanding First-tier and Upper Tax Tribunals’ where we explained the manner in which the First-tier Tax Tribunal (FTT) becomes involved as part of the Appeals process. We also explained the initial procedures adopted by HMRC in handling most disputes before they are allowed to be passed to the FTT by way of appeal.
While most HMRC decisions can be appealed, it is important to consider the period of time allowed by the law for the presentation of an Appeal.
Once a decision has been made, HMRC will notify the taxpayer of the outcome through a letter, an Assessment, Penalty Notice or other document, and will advise upon whether or not a right of appeal is available.
Where a right of appeal exists and is exercised, it must normally reach HMRC within thirty days of the date shown on HMRC’s notification and not the date of receipt by the taxpayer. However, by virtue of The Taxes Management Act 1970 (‘the Act’), the right to appeal is not automatically lost if the deadline is not met, even where a considerable period of time has passed after that date.
The procedures relating to both direct taxes, such as income tax, and indirect taxes, such as VAT & excise duties, whilst varying slightly, are substantially the same.
Naz Maqsoom of KANGS comments upon the procedure.
The Relevant Law
The Act provides:
S.49 Late notice of appeal
Where:
- Notice of Appeal may be given to HMRC, but
- no Notice is given before the relevant time limit,
Notice may be given after that time limit if—
- HMRC agrees, or
- where HMRC does not agree, the Tribunal gives permission.
If the following conditions are met, HMRC shall agree to Notice being given after the relevant time limit:
- the taxpayer has made a request in writing to HMRC to agree to the Notice being given,
- HMRC is satisfied that there was reasonable excuse for not giving the Notice before the relevant time limit had expired,
- HMRC is satisfied that the request was made without unreasonable delay after the reasonable excuse ceased.
HMRC must notify the taxpayer whether or not it agrees to the giving of Notice of Appeal after the relevant time limit. If HMRC is not so satisfied, it must notify the taxpayer of the right to seek permission for a late appeal from the First-tier Tribunal.
Reasonable Excuse
What may be acceptable
If the taxpayer misses a deadline to appeal a decision, a reasonable excuse for such failure is normally required.
There is no definition of a ‘reasonable excuse’ but HMRC states that one may arise if, for example:
- a partner or close relative died shortly before the tax return or payment deadline,
- an unexpected stay in hospital prevented dealing with tax affairs,
- a serious or life-threatening illness occurred,
- computer or software failure prevented completion of an online return,
- HMRC encountered disruption to its online services,
- the completion of a return was prevented by flood or theft,
- postal delays occurred,
- delays resulted from the taxpayer’s disability or mental illness,
- the taxpayer was genuinely unaware of or misunderstood any legal obligation,
- reliance was placed upon a third party to submit the return, but that person failed to do so.
Once a reasonable excuse has ended, the taxpayer must proceed without unreasonable delay.
What will not be acceptable
Failure to provide a reasonable excuse is likely to result in an appeal not being allowed.
Such unreasonable excuses may include:
- pressure of work,
- family issues,
- failure to make payment as the result of a cheque which ‘bounced’ or insufficient funds in an account to meet a transfer payment, unless the failure arises outside of the taxpayer’s control,
- the workings of HMRC’s online system were not understood,
- HMRC had not provided a reminder,
- the tax return contained one or more errors.
Unreasonable Delay
Each situation will be considered according to its individual circumstances but, generally, a fourteen day period will be allowed, unless another time limit applies.
Appeal to the First-tier Tribunal
If HMRC refuses to allow an ‘out of time’ appeal, the taxpayer may submit an Appeal to the First-tier Tribunal. This Tribunal hears the full range of appeals against HMRC decisions in relation to both direct and indirect tax cases.
An Appeal can only be made where allowed by the law and, in the case of doubt, the Tribunal will determine whether or not it has jurisdiction.
As with the time limits mentioned above, an Appeal must be lodged within thirty days from the date of the original decision or any decision following review as notified by HMRC. If the Appeal is made outside of the permitted period, sufficient reasons for the delay must be provided.
How Can We Assist?
Any form of HMRC tax dispute is invariably technically complicated, frequently involving examination and consideration of a substantial volume of historical paperwork.
The team at KANGS regularly supports clients in circumstances where, on the face of it, the time limit for presenting an Appeal has lapsed.
- In such circumstances our Team will:
- examine the reasons for the time lapse,
- advise on the potential for presenting an ‘Out-Of-Time’ Appeal,
- assist in the preparation and submission of a Request for Permission to Appeal,
- liaise with HMRC in pursuit of the required approval to Appeal.
It is essential to obtain highly experienced and skilled representation in any form of dispute with HMRC and, clearly, where potential time limits are relevant this should be done immediately.
Please feel free to contact our team using the details below as they will be delighted to hear from you.
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.
Top ranked by leading legal directories Chambers UK and the Legal 500.
