How cases get to a Tax Tribunal
Most tax investigations carried out by HMRC are resolved by reaching a negotiated financial settlement.
However, in a few cases the two sides are not able to reach agreement. Sometimes the heart of the dispute will be the interpretation of some tax legislation, where, after both sides have put forward their views in often protracted and detailed correspondence, neither side has been able to persuade the other side that they are right. In many cases the issue will be whether there is sufficient evidence to take a particular view, for example to support unexplained deposits in a private bank account held by the proprietor of a business where HMRC want to treat these as unrecorded business takings.
Where the taxpayer, or the agent acting, is unable to agree with the HMRC officer carrying out the tax investigation, the taxpayer can request a review of the case by an independent officer from within HMRC. Experience suggests that it is rare for this review to lead to a complete change of mind by HMRC, but it does sometimes happen.
Even after review by an independent officer from within HMRC, if the taxpayer is not satisfied with the outcome, the tax system provides for an independent arbiter of tax disputes, namely the Tax Tribunal. The Tax Tribunal is part of the Court system.
Most cases begin by going before the First Tier Tribunal; both sides have the right to lodge an appeal against the decision, but only where it can be shown that the First Tier Tribunal has erred in a matter of law; the First Tier Tribunal makes the final decision on questions of fact. If an appeal is allowed it is usually heard by the Upper Tribunal. In some circumstances further appeals can be made to the Court of Appeal or even the Supreme Court.
What happens at the First Tier Tax Tribunal?
The First Tier Tribunal is the least formal of the arbiter bodies. Even this, though, is formal enough to be unsettling for many taxpayers. A judge, often with a colleague, hears evidence put forward by both sides of the dispute. Often witnesses will be called and questioned by the parties, and perhaps the judge.
The judge will then retire to consider the decision, which can be given immediately after the hearing or later in writing. A short version of the reasons for the decision will be given, but a more detailed version can be requested.
How can WLH Tax Help
If you have reached a dead-end in your negotiations with HMRC then WLH Tax can help to bring the case to a conclusion. We will review the case and give you our view as to the likelihood of success at the Tax Tribunal. If appropriate we will re-commence negotiations with HMRC – often a new adviser with a slightly different perspective on the case can unblock the negotiations. Where possible it is usually better to agree a settlement without going to the time and expense of a hearing before the Tax Tribunal.
If renewed negotiations fail to resolve the issues, WLH Tax can prepare and present your case before the Tax Tribunal. Evidence needs to be presented in a coherent manner, and the complete case that is to be made must be put forward. There is rarely an opportunity to bring forward a new argument at a later hearing in a higher court. Where appropriate, reference should be made to relevant legislation and to previous tax cases which support the case being made; it is also advisable to pre-empt any arguments, legislation and tax cases which the other side might bring forward to support their case.
Most accountants do not have the experience or expertise to prepare a case properly for a hearing at the First Tier Tax Tribunal. WLH Tax specialises in tax investigations. Although we usually manage to resolve any tax disputes without recourse to the Tax Tribunal, we have the required experience and expertise to put forward your case if necessary.
If you and your adviser are unable to resolve a tax dispute with HMRC by agreement and you want to consider taking the case to a Tax Tribunal, then please contact us for a free, confidential and no obligation discussion. We are happy to have an initial free of charge meeting with prospective clients.