Tax disputes and HMRC appeals

What are tax disputes and HMRC appeals?

HM Revenue and Customs (HMRC) disputes and tax appeals are common disputes in England and Wales. If a person disagrees with a HMRC decision, they have a right to appeal the same.

The tax disputes process usually begins with a decision letter from HMRC. This letter will indicate whether said decision can be appealed or not. It also specifies the decisions that can be contested, such as a tax bill​​. Taxpayers have various routes open to them to resolve tax disputes, including Alternative Dispute Resolution (ADR) which can be used at any stage of an appeal, including during a compliance check if an agreement cannot be reached​​.

The legal framework used to resolve HMRC appeals and tax disputes is HMRC’s Litigation and Settlement Strategy (LSS)​​.

A taxpayer must appeal within 30 days of the decision letter, detailing their disagreement and providing any additional information that supports their case​​.

Disputes may be escalated to an independent tax tribunal if necessary. This step is considered in circumstances where the taxpayer is not satisfied with the outcome after HMRC has reviewed the initial appeal​​​​.

Tax litigation in the UK has become more assertive in recent years, with HMRC taking a stronger stance against tax avoidance​​.

For those wishing to appeal or engage in tax dispute resolution, there is a two-stage process. The first stage is to write to HMRC office to give notice of the appeal within 30 days from the date of their decision notice. HMRC will then either confirm, amend, or agree with the taxpayer’s assessment​​. The second stage involves appealing to the First-tier Tax Tribunal if the taxpayer remains dissatisfied after HMRC’s review​​.

The process and considerations for appeals can differ depending on whether the matter is related to direct tax or VAT​​. It’s important for taxpayers to be aware of these differences and to seek professional advice if they are considering an appeal against an HMRC decision.

Types of tax disputes and HMRC appeals

Tax disputes and HMRC appeals can arise for a number reasons and should be categorised in different ways. Some of the reasons and types of disputes and appeals include the following:

• Appeals vs. disputes: An appeal is appropriate when a taxpayer believes that HMRC has used incorrect facts to calculate a tax bill or an overpayment, particularly in the context of Tax Credits. A dispute, on the other hand, may involve other types of Tax Credit overpayments not based on factual inaccuracies​​.
• Types of tax disputes: Disputes over tax liability are common and can be caused by issues such as being incorrectly charged on income tax or being denied a tax refund. These disputes can become complex and may require detailed understanding of tax laws and regulations​​.
• Resolution process: The process for resolving tax disputes can vary depending on whether the dispute is about direct tax or VAT. The resolution process typically starts with a review by HMRC and can escalate to an appeal to the First-tier Tax Tribunal (FTT) if necessary​​.
• Settlement and review: Many tax disputes are resolved by reaching an agreement with HMRC. If an agreement cannot be made, taxpayers have the right to request an independent review of HMRC’s decision. This review is conducted by an HMRC officer who has not been involved in the case previously. The review can lead to the original decision being upheld, amended, or reversed​​.

In summary, tax disputes and appeals can be a complex area requiring an understanding of the specific processes and grounds for challenging HMRC’s decisions. Taxpayers must carefully consider the nature of their dispute, the type of tax involved, and the best method to seek a resolution.

Using a solicitor to help with a dispute or appeal

A solicitor can provide invaluable assistance in tax disputes and appeals with HMRC in several ways:

• Solicitors specialising in tax law understand the complex legal framework and procedures that come with handling tax disputes. They can provide expert advice on the merits of the case and the likelihood of success.
• Solicitors can act on behalf of a client in dealings with HMRC, ensuring that the client’s case is presented effectively and professionally. This includes corresponding with HMRC, preparing documents, and advocating for the client’s position.
• A solicitor can negotiate with HMRC on behalf of the taxpayer to try to resolve the dispute without the need for formal appeal proceedings, potentially saving time and money.
• Solicitors and dispute resolution teams can guide clients through Alternative Dispute Resolution (ADR) processes, which may be a more amicable and cost-effective way of settling a tax dispute than going to a tribunal.
• If a dispute progresses to the stage where a review by HMRC or an appeal to the First-tier Tax Tribunal is necessary, solicitors can prepare the required paperwork and appeal forms, provide representation at the tribunal, and advise on the procedural aspects of the appeal process.
• Solicitors can gather evidence, prepare legal arguments, and ensure that all relevant facts are clearly presented to HMRC or the tribunal.
• If it is in the client’s best interest to settle the dispute, a solicitor can advise on the terms of the settlement and ensure that it is legally sound and minimizes future liabilities.
• Solicitors can ensure that the taxpayer’s rights are protected throughout the process, including the right to a fair hearing and the right to appeal within the statutory time limits.
• A solicitor can help prevent the dispute from escalating by addressing issues early.
• After resolving a dispute, a solicitor can assist in ensuring that the taxpayer remains compliant with tax laws and help with future tax planning to minimise the risk of further disputes.

Involving a solicitor early in the process can often lead to a more favourable outcome and can help navigate the complexities of tax law and the HMRC’s procedures.

Why choose Expert Commercial Law?

Expert Commercial Law can assist with your tax dispute or HMRC appeal case by connecting you with an experienced tax law solicitor from our panel.

All of the law firms on our panel have the experience and expertise required to take on your case. Each solicitor is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

The tax lawyers on our panel can provide quality legal advice throughout your claim to help you achieve the best outcome possible.

Alongside the HMRC and tax dispute services our solicitors can offer, they can also help with commercial claims, such as breach of contract, partnership disputes, fraud claims, restrictive covenants and CCJ removal.

Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to an injunction query or a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing your case to a panel firm.