If you disagree with a decision made by HMRC, you can challenge this by appealing to the first-tier tax tribunal. This is a body which is independent from the government, ensuring your argument will be heard and a decision made objectively.
Unfortunately only a very slim number of tax appeals are held up by the tribunal in the taxpayers favour. In fact a recent study showed that just 14% of tax appeals, which were placed before a judge, resulted in a successful outcome for the taxpayer. This is because what HMRC will accept as a reasonable excuse for an individual not keeping up with their tax obligations is very narrow. Where suffering a sudden family bereavement days before the deadline may be accepted as a genuine reason, simply being too busy with other things is an excuse which is almost certain to be dismissed.
When can I appeal to the tax tribunal?
When you can take your complaint to the tax tribunal depends on what type of tax your issue relates to. For these purposes, HMRC split taxes into two categories; direct tax and indirect tax.
- Direct tax – This includes Income Tax, PAYE tax, Corporation Tax, Capital Gains Tax, National Insurance contributions, Statutory Sick Pay, Statutory Maternity Pay, Inheritance Tax. If your compliant refers to one of these taxes, you are unable to take your claim to the tax tribunal without first appealing to HMRC. If you are unhappy with the decision given you are then free to escalate your claim to the tax tribunal for further consideration.
- Indirect tax – VAT, excise duty, and customs duty are examples of indirect tax. You are able to go directly to the tribunal to start your challenge.
Appealing to the tax tribunal should be seen as a last ditch attempt to resolve the situation once all other options have been exhausted. Before taking this step it is advised you first apply for Alternative Dispute Resolution.
Alternative Dispute Resolution (ADR)
This involves a third party stepping in when negotiations with your HMRC officer are failing. They will not take over the investigation, but will instead be there as an objective, neutral mediator who will try to find ways of ending the ongoing dispute. If communication between yourself and HMRC has broken down, or you are unable to come to an agreement as to the situation and what has happened so far, ADR is well worth considering.
Going through the ADR channel does not prevent you from appealing the decision or going to the tax tribunal at a later stage should you be unhappy with the outcome, but it can be a useful way of bringing a dispute to an end without involving the court.
ADR is not right for smaller businesses with disputes relating to fixed penalty charges or for requesting additional time to pay.
Late Self Assessment penalties
If you have been fined for late filing or late payment of your Self Assessment, you can appeal this decision by completing a SA370 form. This appeal must be lodged within 30 days the penalty notice being sent by HMRC and can be done online or via post. Before submitting an appeal you must have a valid reason why you have failed to adhere to the filing or payment timings laid down by HMRC. Reasons such as being busy or forgetting to submit your return, will not be accepted as a valid excuse and the penalty charge will remain. However, if you do have a genuine reason for failing to keep up with your tax obligations, submitting a SA370 is the most appropriate way of providing this information.
How Handpicked Accountants can help
Tax is often a complicated matter, made even more difficult if you are having to juggle this with running a business. An accountant can take this pressure off you and let you focus on making your business a success. Handpicked Accountants can put you in touch with a trusted and reliable accountant in your local area. You can start your search by using our online database, or you can call our experienced advisers on 0800 063 9258 who will take the time to understand your business and expertly match you up with the best accountant based your specific needs and requirements.