The issue of an appealable decision marks the start of a formal process with defined legal stages, leading ultimately to the Tax Tribunal and potentially on to the Higher Courts.

We handle all stages of the appeal process.

Our objective always is to resolve any dispute with HMRC at the earliest possible opportunity. Litigation really must be the last resort. However, sometimes HMRC’s position is driven by their Litigations and Settlement Strategy considerations such that compromise is impossible. Thankfully, such occasions are rare, and in our experience, there is usually considerable scope for constructive action before recourse to the Tribunal becomes inevitable.

Having said that, the prospect of the Tribunal is sometimes a very effective deterrent to HMRC, especially in cases where the technical content is not complex (e.g. PAYE disputes) or Closure Notice applications where HMRC are prolonging an enquiry or investigation.

HMRC reviews

All appealable decisions by HMRC carry the right to a review. This is not an independent review, since it is undertaken by HMRC, but the process is supposed to involve a reconsideration of the case by someone who has not been involved in the original decision.

HMRC’s statistics show that on all internal reviews, there are reasonably good prospects (49%) for a successful outcome, even if that is only reducing or eradicating penalties. Indeed, there is a 60% chance that VAT penalties will either be eradicated or reduced. It is interesting to compare the taxpayer’s chances within internal review, with those at the Tax Tribunal, where only about 17% of cases are found for the taxpayer and only 6% of decisions are varied. There are underlying reasons for this massive disparity – one is that a proportion of successful appeals are weeded out at Internal Review, and some are resolved within Alternative Dispute Resolution (“ADR”), but some 44% of cases are settled in the taxpayer’s favour on the path to the Tribunal, meaning the appeal can bring HMRC to the table. That last statistic seems surprising, but only 25% of cases that reach the Appeal stage have been through internal review, and only 15% of taxpayers are represented in Internal Review (34% at Internal Review).

There is a powerful lesson here. The review process is your first chance to secure a change of mind by HMRC. If this is wasted, the process will then become focused towards a hearing before the tax tribunal, with all its attendant costs and uncertainties. Therefore, it is essential to make the most of the review process. A strong case must be put to HMRC to show them why they should change their mind. Asking HMRC to review their decision without giving good supporting reasons will only result in them rubber-stamping the original decision. Simply reiterating arguments that have already been presented will also fail in most cases. The statistics show that it is possible to change HMRC’s mind, but they also show that it is hard to achieve.

We can help you

At Covertax, we have many years of experience in presenting arguments to HMRC, and we have submitted numerous applications under the review process. We know how to present your case in the best light, and we also know the most effective techniques to get HMRC to change their mind. Submissions under the review process must be made to a very short timescale, which again adds to the difficulties. We are geared up to turning these assignments around quickly.

If you need help with drafting a review submission, or would like us to do the whole thing for you, please call us.