We offer the following services to support you and your team

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Tax planning

Sometimes it may be perceived that HMRC’s interpretation of the law either runs entirely contrary to the wording of the statute, or alternatively does not take into account alternative interpretations suggested or  demanded by case law. This may end up with a direct contest between HMRC’s ‘policy’ and the law. The Commissioners will always, in our  experience, fight hard to protect the former, even where it is inconsistent with the law.

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Assessments

When this was looked at about a decade ago, it was found that almost 45% of assessments issued by HMRC were incorrect in at least one material particular. Sometimes these errors would be fatal to the assessment. We have seen no reason to suggest that HMRC’s  accuracy has improved in any meaningful way. Yet if such assessments go unchallenged, they become payable and the taxpayers will lose out. Rarely, in our experience, do such  assessments under-state a taxpayer’s liability. There is also an increasing occurrence of HMRC seeking to raise assessments outside the time-limits as set out in the legislation. Again, such a practice will always need to be challenged.

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Penalties

Outside of specific matters such as late  registration, incorrect invoices etc., the current penalty regime was introduced to counter mistakes that HMRC would not have been necessarily expected to have found, and which were made carelessly or deliberately, but which did not provide ‘a reasonably arguable view of the situation’. What they were not introduced to do was to counter genuine challenges to HMRC’s ‘policy’, although officers will look to issue them in such cases. In the 2021 report Evaluation of HMRC’s implementation of powers, obligations and safeguards implemented since 2012, the draftsman reported: ‘Several external contributors felt that HMRC’s approach to penalties could be heavy-handed and in some cases HMRC are sometimes seen to use penalties too aggressively to discourage taxpayers from challenging HMRC’s views’. Yet nothing has changed. It  
appears that HMRC are content to be aggressive with penalties. Consideration should always be given to challenging them.

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The Appeals Process

The first step in challenging any decision, assessment or penalty issued by HMRC is to make a fully-argued case to the issuing officer as to why the document concerned is incorrect. Just occasionally they will change their mind, although in our experience this does not happen too regularly. The more likely outcome is a ‘decision letter’, upholding the previous decision, and giving time limits for any further challenge – either a Statutory Review within HMRC or a direct appeal to the First-tier Tribunal. The Statutory Review is a second-look within HMRC. Although the process should only be to see whether or not the document in question is consistent with the law, reviewing officers have told us that they are not entitled to find against HMRC’s ‘policy’. It is of  limited use, but just occasionally will provide a solution. Either directly from the decision letter, or after the Statutory Review upholds HMRC’s document, the next stage is to appeal to the Tribunal. The first-tier Tribunal is the first stage of the statutory process. It determines the facts of the case, and makes a decision as to the law. This decision is not binding on any other Tribunal. Thereafter, an appeal can be made to the Upper Tribunal. This is the equivalent of the High Court. The decision of the Upper Tribunal is binding on all First-tier Tribunal cases. Further appeals may be possible to the Court of Appeal or even the Supreme Court.

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Litigation

It is possible for taxpayers to be  represented otherwise than by Counsel in the first-tier Tribunal and even in the  Upper Tribunal – although this is less usual. We appear regularly in the Tax Tribunals. However, increasingly in these Tribunals, and compulsorily in the Court of Appeal and Supreme Court, taxpayers are  represented by members of the specialist tax bar, albeit that they are briefed by VAT consultants. We at VATangles work regularly with  barristers of all seniorities – from the most junior to the top QCs working in the field. It is unusual that a working day goes by without some kind of communication with barristers. Our briefs are known for being full, and with compete legal arguments. This ultimately proves to be less costly to the Appellants. We have the respect of Counsel and their clerks at all levels.  

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ADR

Another option, in certain circumstances, is to use ADR. In this case, an HMRC trained mediator will liaise between your client and the case officer to endeavour to find a solution to the dispute. There are occasions where such an  approach may be appropriate. However, as it is currently set up (and this may change) it is still HMRC looking to  mediate disputes between taxpayers and one of their own! However, should the matter be suitable for ADR, we will represent the taxpayer in the discussions, and will ensure that the  optimum case is presented to the mediator for his or her consideration. Undertaking ADR does not preclude your client at any time from appealing to the Tax Tribunal.

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