The Tax Chamber of the First Tier Tribunal was established on 1 April 2009 and replaces the General and Special Commissioners.
The Tax Chamber is independent to HMRC and hears the majority of appeals against HMRC. The onward appeal, on points of law, is to the Upper Tribunal (Tax and Chancery).
The principal difference now is that HMRC are no longer responsible for listing appeals for a hearing. Instead it is the individual’s responsibility to make an appeal to the Tribunal. It will then be up to the Tribunal to decide where and when it will be heard.
The Tax Tribunals are now much more legally focussed than before and experience has shown that in order to secure the highest chance of success, preparation, planning and gathering of evidence at an early stage is crucial. Therefore, where matters are to proceed to litigation, it is vital to consult with a tax team, who are highly experienced not only in the mechanical process of the Tax Tribunals, but also in articulating individuals’ cases in front of legally qualified Judges.
Processes and Deadlines
Once HMRC has issued a decision which can be appealed against, then an individual has 30 days to submit their written appeal to HMRC. It is usual to submit this appeal to the officer who has made the decision and who is referred throughout the process as the decision maker.
Since the new Tribunal process, it is not recommended that the sole reason for the appeal is that any assessments / determinations are estimated and excessive. Specific reasons together with calculations of the revised liability should be submitted, as on occasions the decision maker may accept the reasons for the appeal and settle matters before going any further. An application to postpone all or part of the disputed liability can be made at the same time as the appeal.
However, if it has not been possible to settle the appeal, then HMRC can offer an internal review of the issue. Where HMRC offer a review, an individual has 30 days to accept the offer. Once accepted, the decision maker submits all paperwork to another officer, also known as the reviewing officer, who has not previously been involved in the case and the reviewing officer will write out providing their contact details. Further evidence can be supplied in support of the case. The reviewing officer has 45 days to complete their review. This date can be extended by mutual agreement. Upon completion of the review, the reviewing officer will either:
- Uphold the original decision.
- Vary the original decision.
- Settle the appeal.
If the review decision is not accepted, then an appeal can be made to the First Tier Tribunal. This has to be made on a standard application form and submitted to the First Tier Tribunal within 30 days from the review decision.
Once an appeal has been received by the First Tier Tribunal, it is placed in one of four categories:
- Default paper.
Notification of which category the appeal has been allocated to will be sent, together with an outline of how the appeal will proceed.
With the exception of the default paper category, the remaining three categories all require an oral hearing. Where HMRC are required to produce a Statement of Case, they will have 42 days under the default paper category and 60 days under the Standard and Complex categories.
It may be appropriate in complex cases that Case Directions are agreed by the First Tier Tribunal, which will set out precise deadlines for the appellant and HMRC. These Directions could include deadlines for the exchange of documents which have not previously been submitted to either party, dates for exchanging witness statements and a deadline for providing skeleton arguments.
The First Tier Tribunal will set a date for the hearing based on the complexity of the case and could run for several days. The appellant usually goes first in presenting its case and HMRC (the defendant) can cross examine any witnesses that are put forward. A decision by the Judge may be given on the day or at a later date (within 28 days of the hearing).
Whilst a decision can still be appealed to the Upper Tribunal (Tax and Chancery) this is only on points of law. Consequently it is imperative that all the facts of the case are presented in a clear and coherent manner to enable the Judge to make an informed decision.
For more information and to arrange a free initial consultation please contact Doug Sinclair.