Are formal appeals worth the effort?
Right to appeal
Disagreements with an assessment or decision taken by HMRC are common. In most cases companies have the right to ask for a formal review . The starting point differs depending on whether the tax is direct, e.g. income tax, or indirect, e.g. VAT. This article focuses on direct tax.
Tip. Before asking for a review the business must appeal against HMRC’s assessment etc. Usually the appeal must reach HMRC no later than 30 days from the date the assessment is issued.
Perfect timing
The right time to ask for a formal review depends on the circumstances in which HMRC has issued the assessment etc. For example, if the company has reached an impasse in a tax enquiry and HMRC issues a closure notice, an appeal can be made against the notice and, at the same time, a formal review requested. However, if an assessment arrives out of the blue that the company disagrees with, the first thing to do is appeal. A review is only requested if the disagreement can’t be resolved.
Tip. HMRC has 30 days in which to respond to the request for a review. If it won’t agree to one the company must either continue trying to persuade it that its assessment or decision is wrong through normal channels or ask the Tribunal to settle the matter. HMRC can offer a formal review even if there was not a request for one. There are 30 days to accept the offer.
What next? From the date a formal review is accepted HMRC has 45 days in which to carry it out and notify the taxpayer of its outcome. Note. The review is usually undertaken by someone other than the person the company has been dealing with.
Tip. HMRC can ask for more time to complete the review. It’s good practice to agree if the extra time is not unreasonably long. After all, co-operating might help your case whereas being difficult usually won’t.
Worth a try?
Though it’s easy to request a formal review , the bad news is that they only go the taxpayer’s way about a third of the time. This isn’t unexpected - it’s HMRC that undertakes the review. In our experience, a review varies between mere lip service on the part of HMRC to a genuine attempt to address the issues.
What to do? If an appeal is going nowhere the options are limited:
- accept HMRC’s position; or
- continue to argue indefinitely until HMRC or the company refers an appeal to a Tribunal to decide (see The next step ).
Costly. Continuing to argue the case directly or at the Tribunal costs time and effort (there could be professional fees too). A request for a formal review is therefore a sensible option if you are deadlocked: they take relatively little time and could save you money. Even if the review fails you can still take your appeal to the Tribunal.
For more information about how to appeal, visit https://www.tips-and-advice.co.uk , Download Zone, year 13, issue 7.
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