Setting the scene

• So you and HM Revenue & Customs (HMRC) don't see eye to eye about a tax matter. HMRC is what the Inland Revenue is now called following the merger with Customs & Excise.



• This guide is intended to help you work through all the stages of making an appeal.




• Examples of when the guide might help you are if HMRC:

  • are asking for more information than they need, or;
  • are taking too long with their enquiries or
  • want to charge you a penalty or surcharge which you think is too high.


• The information we provide in this part of the website is for people who have a right of appeal from some decision of the HMRC - we tell you what to do and when.



• A lot of the following information also applies to appeals about national insurance contributions, statutory sick pay, statutory maternity pay, statutory adoption pay and statutory paternity pay but it is not specifically for these types of case.




• It is important you know that there are some things we do not cover under this topic:

  • Your problem with HMRC is that they are hassling you for information you know you ought to give them or because they have discovered something you hadn't told them. You will have to sort that out with them. Have a look here for more information on this.
  
  
  
  • If your dispute is about Tax Credits - you need some different help. Have a look at our website section on tax credits appeals & complaints and if the problem is with Customs & Excise and VAT you need to look at VAT - Appeals & Applications to the Tribunals
  
  
  
  • Also this guide can't help you if your problem with HMRC is because they are demanding money you owe them but can't pay. In that case, your best bet is to go to the Citizens Advice Bureau.

To make it easy for you to find what you need - there are various topics you can have a look at or you can simply read the guide in full. Click the relevant link for information on:

• Will I be able to make an appeal?
• Who will be dealing with my appeal?
• What are the time limits involved?
• Will my appeal hearing be in public?
• Do I need to pay any tax in the meantime?
• Should I try to settle my dispute before the hearing?
• Where can I get some help?
• How do I prepare my case?
• What happens on the day?
• How do I take matters further?

Will I be able to make an appeal?

• Where HMRC:

  • Are looking into your tax affairs and demanding excessive amounts of information or taking too long without bringing their enquiries to an end;
  • Have altered your self-assessment after an enquiry because they think you got it wrong;
  • Have made an assessment of tax on you or are disallowing a claim to a relief;
  • Have refused you a sub-contractor's certificate;
  • Have issued a Coding Notice which you think is wrong;
  • Are demanding a penalty or surcharge unfairly;
  
  You may have a right of appeal.



• If you are doubtful whether you have a right of appeal, ask your own tax office or a local tax office - it is usually best to ask in writing. In fact they will often tell you even if you don't ask.

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Who will be dealing with my appeal?

• Appeals are decided independently of HMRC.



• We say that they are one party to an appeal and you are the other.



• The situation will be that you and HMRC are in disagreement about one or more of the issues set out above and/or some other issue and your dispute cannot be resolved by either of you.



• The matter is then decided by one of two independent special tax tribunals called the General Commissioners and the Special Commissioners.



• Sometimes you have to appeal to one set of Commissioners or the other. Generally however you can choose whether to appeal to the General or the Special Commissioners.




• Each type of Commissioner is quite different so it is worth having a look at the main points about each of them:

  General Commissioners

  • Are local non-experts (a bit like magistrates) and often local business people although attempts are being made to broaden the range of people involved
  
  
  
  • Are difficult to find! Your tax office will give you the address of the local Clerk (usually a part-timer, often a solicitor in local practice) if you ask, but the Clerk will not usually do much correspondence with you or offer you any help. This means that all your correspondence before the hearing is likely to be with your local tax office of HMRC, which may give the impression that they are really managing the tribunal - this is not true; the General Commissioners are independent of government and their function is to take an impartial view of the case as between you and HMRC. The assumption that they are part of the Revenue is very widespread.
  
  
  
  • Rely on a Clerk to help them with legal and administration issues;
  
  
  
  • Work as informally as possible. This can give a friendly, non-confrontational impression at the hearing, but does not reduce the burden on you to put your own case and may make them over-reliant on the tax officer who is opposing you for an explanation of the technical issues;
  
  
  
  • Never order you to pay HMRC's costs of the appeal or order HMRC to pay yours;
  
  
  
  • Have a rather time consuming and longwinded procedure if you or HMRC want to take the case further to a higher court.
  
  
  

  Special Commissioners

  • Are skilled tax professionals , usually with years of experience in the legal profession;
  
  
  
  • Sit in London (except in Scottish or Northern Irish cases);
  
  
  
  • Have an office in London and administrative support, which means that they can become (helpfully) involved in appeals at an early stage and your tax office of HMRC does not have to act as go between;
  
  
  
  • Expect cases to be properly prepared and presented, which may sound intimidating but means they have a better chance of success;
  
  
  
  • Can order you to pay HMRC's costs (or them to pay yours) but only if you (or they) have been unreasonable. Such orders are rare in practice.



• If you have professional help in your appeal, your adviser will advise which of the two Tribunals you should choose. If you don't, the temptation is to elect for the General Commissioners on the basis that they are local and sound less intimidating.



• Your Tax Office will always assume you are doing that unless you tell them to the contrary. But, if you have a sensible case, you may do better to elect for the Special Commissioners because:
  
  
  • They will know the relevant law and will not have to rely on your opponent (HMRC) to tell them;
  
  
  
  • They will give you reasons for their decisions;
  
  
  
  • The effort you will have to make to prepare your case properly will be worthwhile in improving your prospects of winning;
  
  
  
  • If you want free or low-cost help in preparing and presenting your case (link to text on free help) you may find it easier to obtain it in London (or Edinburgh or Belfast) before the Special Commissioners than locally before the General Commissioners;
  
  
  
  • If you win, HMRC are less likely to insist on taking the case to a higher court (although the loser always has that right);
  
  
  
  • If the case does have to go to a higher court, the way forward is more streamlined than if the first decision was by the General Commissioners.



• You must decide quickly as to which set of Commissioners (General or Special) you wish to appeal since it is difficult to change horses in mid-stream.



• If you decide for the General Commissioners, you generally can choose whether to go to the ones in the area where you live or where you work or where you have a business (if you do.) You should make that choice at the time you give notice of appeal as otherwise HMRC will choose one of those three instead.



• Although the General Commissioners are often a very suitable tribunal to hear straightforward cases, it is often hard to know whether a case is straightforward or not. If in doubt, it may be best to nominate the Special Commissioners when giving notice of your decision to appeal, since HMRC are much more likely to agree later to a switch to the General Commissioners than the other way round.



• You will also find that HMRC will take your notice even more seriously if the Special Commissioners are nominated.

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What are the time limits involved?

• Generally you have only 30 days to decide to appeal and to which your Tribunal you wish your case to go. You must tell your Tax Office of your decision within that time limit. If you don't, you will be too late.



• HMRC could agree to an extension (but don't have to) and if they don't, you can appeal to the General or Special Commissioners against their refusal to agree. But the wise course is to act within the time limit. HMRC will usually agree to a withdrawal of an appeal if you change your mind later.

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Will my appeal hearing be in public?

• Some people worry a lot about this, so before appealing you should know that the hearing of your appeal will probably be in public.



• This will be true whether you appeal to the General or the Special Commissioners.



• In both cases, human rights law requires public hearings as a general course.



• You can apply for privacy on the ground that a private hearing is necessary in the interests of such things as moral grounds, where minors are involved, the protection of your private life or that publicity might affect a fair and just hearing.



• In practice, you may stand a better chance of a private hearing if you apply to the General Commissioners, but you cannot count on it.



• It is debatable how much it really matters, since most legal proceedings are in public and it is very unlikely that you will find crowds of curious spectators (or reporters) queuing to get in.



• It is true that the law regarding public hearings is quite recent, but there is very little experience of people finding anyone at a General Commissioners' hearing except for the parties to it, and even at the Special Commissioners, the only outsider (if any) is likely to be a specialist tax reporter.



• If you really think that there is a special case for your hearing to be held in private, you should make a request to the Clerk to the Commissioners who are to hear your appeal in the case of the General Commissioners or to the Clerk to the Special Commissioners if the appeal is going to them. You should make that application in plenty of time before the hearing date.

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Do I need to pay any tax in the meantime?

• The fact you appeal does not mean that you can simply avoid paying the tax in dispute.



• Generally, you will have to pay it when it is due and rely on getting it back if you win your appeal. One approach is that whilst your appeal is being dealt with you should pay the correct amount of tax you consider is due.



• If this then proves to be less than the amount you will actually need to pay, you may be charged interest on the excess and similarly if you are due a repayment you may receive interest on the overpaid tax.



• Another way forward is that you can ask your tax office to agree to postponement of that tax. You should do so at the same time as giving notice of appeal.



• If HMRC refuse your postponement request, you can appeal against that to the General or Special Commissioners and ask for the case to be heard quickly enough to make a difference.



• But you may not be wise always to ask for a postponement, because if you lose, you will probably have to pay interest on the tax you will be paying late while, if you win, you may well get some extra interest as well as the repayment of the tax you have overpaid.

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Should I try to settle my dispute before the hearing?

• An appeal can be settled by agreement between the parties.



• You will probably find that your tax office is keen to do that and it can be in your interests too. So don't be shy about telling the tax office why you are appealing and what the main points of your case are.



• You will find that they will be equally forthcoming about telling why they think your appeal is wrong. If you can come to an agreement with your tax office, your appeal will be cancelled, and you probably won't be able to re-open the point again. The agreement has to be in writing to be effective.



• But don't be distracted by the talking from getting on with the preparation of your case.



• It will take some time before it is listed, and you will always have at least 28 days notice of the date. But it will take all the time you have to prepare properly, and you should start straightaway.

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Where can I get some help?

• If you can afford professional help you will probably be getting it before you appeal. You certainly should be. But this guide is intended for those who can't afford that kind of help, and if necessary will have to do the appeal job themselves.

Public Funds

• In a few cases, you may have the right to help from public funds in fighting your case. They are where the appeal concerns penalties the courts have declared to be criminal within the terms specified by the European Convention on Human Rights or where you want to argue that issue; and it is in the interests of justice that you should be legally represented.



• In practice funding is most likely to be available where you are disputing a penalty, which is substantial either in terms of its amount or its impact, and which has been imposed in addition to the tax you have to pay.



• You must also be financially eligible for funding i.e. not too rich! If you think you come close to this sort of case, you should download here or ask your tax office for a copy of the Guidance to HMRC staff on Human Rights and Penalties at the end of which is the Community Legal Services guide to Public Funding for Legal Advice and Representation before the General and Special Commissioners of Income Tax.

Revenue Bar Association

• The Revenue Bar Association have a scheme under which young tax barristers will agree to undertake small cases before the General or Special Commissioners at a fixed fee (usually around £1,000 plus VAT)




• For that figure, the tax barrister will usually agree to:

  • decide if the case is appropriate to the Scheme and whether it is worth fighting;
  • give pre-hearing advice, mainly about what needs to be done in preparation for the hearing;
  • attend the hearing and represent you.



• If the barrister advises that the case is not worth fighting (and this can be the most valuable advice of all) the fee will probably be reduced by half. You can visit the Revenue Bar Association at their website.



• The problem with tax barristers is that they cannot take cases directly. You have to deal with them through what is called an intermediary - a go between or middle-man.



• This intermediary is also a professional; he or she might be a solicitor or a chartered tax adviser or a qualified member of one of the recognised accountancy professions. And his or her charges would be on top.



• But if you have put your papers into a decent order and you include a summary of what your case is about and he or she doesn't have too much sorting out to do, the intermediary might be willing to instruct a young tax barrister for you under this scheme at a nominal charge.



• Of course, a thousand pounds is a lot of money to find although it would be money well spent if it can be raised. The alternative is to manage on your own but it would be worth looking for a friendly charity that might be able to help you.



• There is no scheme along these lines that LITRG have been able to identify, but the situation is changing all the time and it would be worth checking regularly with our website to see if there are any developments in this field.

How to help the person giving you advice

• If you do seek help, make it easy for the person providing it. That will make it cheaper (if you are paying) and quicker and better (whether you are paying or not).



• So make sure that there is a summary, which explains the main points and asks the questions you want answered. Include copies of all relevant correspondence with HMRC, in date order and filed or stapled together so it is easy to handle.



• If accounts are important, make sure they are clear and preferably professionally prepared.



• Do not supply scraps of paper or unexplained bills or bank statements in the hope that the adviser will sort it all out and make sense of it.



• This preparatory work you do will help not only your adviser but will be valuable in preparing your case to be presented to the Tribunal.

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How do I prepare my case?

Putting your file together

• The object will be to have a single file (a ring-binder is handy), which contains all your witness statements and copies of the documents you need to refer to and your skeleton argument (see later in this section for more on this) of the issues of your case.



• Of course, if there are a large number of documents or paper - you may need more than one folder, but for most cases one should do.



• Your tax office may be preparing a similar file, and if you and they can agree on a single file (possibly a ring file) containing all the material needed by both sides, that will make life easier at the hearing.



• So keep in touch with your tax office (or whoever is handling your appeal from their side) because you both share a common interest in having the case settled.



• You may be able to agree with them a common statement of facts, which can then be used as the basis for the appeal without having to be proved by evidence.



• The pages in the file should be numbered so that when, during the hearing, you refer e.g. to page 38, everyone present who has one of your files (HMRC and you and each member of the Tribunal and the Clerk (if at the General Commissioners) and the witness is looking at the same thing.



• Dividers separating the file into sections can be very useful, but if you use them - make sure that every file has the same divisions.



• Since it is your appeal (and not HMRC's) the emphasis is generally on you at every point. This means that generally you must prove your case based on the facts and if you don't succeed in this you will probably lose.

Witnesses and witness statements

• Any fact on which you rely, and which HMRC has not agreed, will have to be established as correct by you. Sometimes documents will do it, and sometimes evidence from a witness, and sometimes both together.



• You are likely to be your own most important witness and you must think carefully about what you will say.



• Witness statements make life easier for everyone. They set out, in numbered paragraphs, the evidence the witness is giving. For example, they might say something like:

  On April 1 200X I had a meeting with ABC and a copy of a note I made immediately afterwards is at page XXX in section A2 of the file.

• Start drafting your own witness statement as early as possible, and make sure it covers everything you said or did or were told and which matters for the purpose of your case. The statement should deal with each fact in date order.
• It is quite possible that you are the only witness but if you are calling other witnesses, help them to make similar statements of their evidence, but make sure they are in their own words and not yours.



• Bear in mind that you and your other witnesses are liable to be cross-examined by the person handling the case for the tax office.



• Ask the tax office whether they will be calling any witnesses; if they are it is sensible to exchange copies of witness statements ahead of the hearing, and even if they are not, you may as well let them have copies of yours.



• Make sure that references to the witness statements are properly indexed.



• It is unlikely that you will want to call a witness who is unwilling to give evidence. But if you do and your appeal is to the Special Commissioners, you can apply to their Clerk in writing for a witness summons. Your application should say why you require that particular witness to attend.



• If your application is granted you will receive a witness summons through the post that you have to serve on the witness, and you will be responsible for the witness's reasonable travelling expenses to and from the appeal.



• If your appeal is to the General Commissioners, you would be wise to assume that there will be no way of compelling a reluctant witness to turn up.

Skeleton arguments

• Skeleton arguments summarise the relevant legal and technical issues and apply them to the facts you hope to prove. They are not easy to prepare, but help enormously at the appeal hearing. We have set out below a dummy argument - it has no actual tax basis but is just intended to give an example of how to set out your skeleton case:
  
  

  The law says that a person is chargeable to income etc. tax if he receives more than...... income from... in any tax year (refer to the relevant law here - see file page xxx). However, I did not receive income from Y in any of the years 2002-03 to 2005-06 (see my witness statement para Yy file page yyy) and I received only £x income..... from X (see my witness statements para. Xx file page xxx).

  Under HMRC Concession Z9 (see file page xx - copy of the Concession) - I am not chargeable to tax on the income. I am entitled to rely on that concession - see (e.g. quote the name of a similar tax case if you can find one).

• Bear in mind that collecting together and then explaining your points is particularly hard where the appeal hearing is contested. It is much better to do so in advance and to write them down.



• As you will see, it is helpful to include copies of any legislation you use in the file for the hearing and this applies also to relevant extracts from any other similar cases to which you wish to refer.



• Do not be intimidated by unfamiliar language. The point is to show how the law can be applied to the facts of your case. You can certainly refer to pages of textbooks to support your case rather than using the formal legislation. HMRC's website can be very helpful in providing information.

Other ways to get ready for a General or Special Commissioners meeting

• If your case is to be heard by the Special Commissioners, ask whether there are any earlier cases you can attend just so as to listen and watch. Their office will tell you if you telephone them.



• The experience of being an audience at somebody else's case can be enormously helpful in preparing the presentation of your own.



• If your case is to be heard by the General Commissioners, you can ask the clerk the same question, but it is less likely that there will be a suitable case for you to attend.



• Do take any opportunity you may have to rehearse your case in front of family or friends or, better still, any professional who will give you the time. It is surprising how many weak points will come to light that can be cleared up before the hearing.

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What happens on the day?

Opening the meeting

• The first and obvious point is to turn up on time!



• You should have made sure you know in advance exactly where you have to go and how to get there. Make sure any witnesses you want to call come too.



• Bring with you your files with sufficient copies for the Tribunal and for your HMRC opponent, and preferably one for witnesses to refer to.



• If your appeal is to the Special Commissioners, they may need one, two or three sets.



• The General Commissioners probably need three (but it would be worth checking in advance with their Clerk) and you should take an extra set for the Clerk as well.



• It is unlikely that you will wish you had brought fewer copies, so err on the side of caution. Remember each set should be in a file containing exactly the same material as the others.



• The Chair of the Tribunal will probably introduce all the members of it and will explain how the proceedings are to be conducted.



• Make sure that each Tribunal member and your opponent has your file.

Setting out your case

• Then you will probably be invited to open your appeal by explaining what it is about.



• When you do that, take everyone through your file so that they can see how it is arranged and what it contains.



• When you have explained briefly what your appeal is about, you will call your witnesses, starting with yourself.



• You must be clear when you are giving evidence as a witness and when you are addressing the Tribunal as the person making the case, but the Chair will help you.



• When you give evidence, it will probably be enough to refer to your written statement and say that it is true. You probably won't be asked to read it out, but if you are, of course you must do so.



• When you have finished, you will be cross-examined by your opponent. His purpose in the cross-examination will probably be to check the truth of what you have said and to put HMRC's case to you, so far as it conflicts with the facts as you give them.



• Remain calm and answer the questions honestly and simply.



• You may want to make a note sometimes of the questions asked and of your answers.



• The Chair or other members of the Tribunal may ask you questions as well.



• When the cross-examination is finished, you may want to raise a few extra points that have arisen from it.



• Try to keep any additional comments very short and make sure the Tribunal can make a note of the points you are making.



• After that, if you have any other witnesses, you can call them and refer them to their statements and ask them to add to any point you think worth stressing.



• Then they too may be cross-examined by your opponent and you should listen carefully to the questions and answers and note down the important ones.



• When your opponent has finished, you can ask the witness additional questions to help explain anything which seems to call for further explanation as a result of the cross-examination.



• As long as you will have the right to address them again when your opponent has finished, you should tell the Tribunal that your case is complete once you have called all your witnesses.



• If you are told that you will not have that right, then you should say that you want to make your closing points.

HMRC's or another opponent case

• It will then be the turn of your opponent (that is whoever is presenting the HMRC case) to explain the HMRC case and call his witnesses, if he has any.



• If he does call any witnesses, you will have the right to cross-examine each of them when they have been taken through their statements.



• You should have received their statements in advance, and prepared in advance the questions you want to ask them. Your cross-examination should always be calm and polite and should probe their account of events where that differs from yours or that of your witnesses.



• Try to note down your questions and the answers you obtain to them.



• After HMRC witnesses have finished, your opponent will probably sum up his case. He will go through the relevant evidence and say what he thinks the facts of the case are and he will explain how he considers the law relates to those facts.



• If he has a skeleton argument, you will probably have seen it in advance and he is likely to base his comments upon it.

The last word

• Normally you will be given the last word, and this is when you will be glad you have taken the trouble to prepare a skeleton argument.



• The idea is to say the evidence has proved how the law applies to the facts of your case and why you consider that you should win your appeal. Members of the Tribunal may ask you questions, and you should listen to them carefully and answer them to the best of your ability.

Breaks for lunch or overnight

• It is quite likely that there will be a break at lunchtime.



• If any of your witnesses is in the middle of giving evidence at that time, you should not talk to them during the lunch break. It is usually best to take a sandwich and find a quiet corner to review your papers and consider how the case is going and whether you need to modify your plans.



• If your case lasts more than one day, there will be an adjournment at the end of the first day. The same principles apply, but the important thing is to get a good night's rest and preferably not stay up too late planning for the next day.

When the case is finished

• When the case is finished, the Tribunal may give their decision straight away, or may say that they will send it in writing.



• If the appeal was to the Special Commissioners you will always get a written decision giving reasons. In the case of the General Commissioners, they do not normally give reasons but simply state whether the appeal is allowed or dismissed.

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How do I take matters further?

• If you lose, you should think very carefully before you decide to make any further appeal.



• The appeal so far has involved little risk of you having to pay substantial costs. But if you go further and lose in the High Court, or above, you will probably have to pay HMRC's legal costs as well as your own, and the amounts could be considerable.



• If your case is heard by the General Commissioners, and they tell you at the hearing that you have lost, you should there and then express your disagreement. All you need say is 'I wish to record my dissatisfaction with your decision.'



• You will then be free to embark on the process of a further appeal, if you so decide but this is time consuming and is quite a longwinded process. The way you would do so, or for appealing from a decision of the Special Commissioners, is outside the scope of this guide.

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