In this section we consider what you can do if you wish to challenge HMRC on tax credits. We concentrate on appeals, and also discuss what you can do in cases where there is no right of appeal.
An appeal is one method of challenging an overpayment. We have written a detailed guide for advisers outlining the various methods of challenging overpayments which can be found in our overpayments section.
Appeals and official error revisions
The right to appeal
Generally, if you are dissatisfied with a decision by HMRC in relation to your tax credit entitlement or any penalty, you have a right of appeal. To this there are some exceptions – notably there is no right of appeal against a decision by HMRC to recover an overpayment, though you do have a right to challenge (or ‘dispute’) HMRC’s decision by writing to HMRC or completing form TC846.
Appeals are dealt with by an independent tribunal which is completely separate from HMRC.
The tribunal dealing with your appeal is the Social Entitlement Chamber of the ‘First-tier Tribunal’. It is administered by the Tribunals Service which is an agency of the Ministry of Justice. The Tribunals Service is legally independent of HMRC. There is a specific set of rules governing the First-Tier Tribunal’s procedures.
If you are dissatisfied with the decision of the First-tier Tribunal, you can appeal further, but only on a point of law and with permission, to the Administrative Appeals Chamber of the Upper Tribunal, which replaced the former Social Security and Child Support Commissioners on 11 November 2008. On matters of fact, as opposed to law, the decision of the First-tier Tribunal is nearly always final.
From the Upper Tribunal, a right of further appeal lies, again with permission and on a point of law, to the Court of Appeal, Court of Session in Scotland, or Court of Appeal in Northern Ireland.
How to appeal
An appeal must be made in writing within 30 days of the date of the decision that you are challenging. This will normally be the date on your tax credit award notice. Generally, this time limit will run from the date you receive your decision. Although the appeal will be heard by an independent tribunal, you must send your notice of appeal to the Tax Credit Office (TCO) which is part of HMRC.
Your appeal does not have to be on a special form. You can use form WTC/AP but a letter will also be sufficient. You must give your name and contact details, confirm the decision that you are appealing against and sign your name.
Additionally, you must explain why you are appealing. It will generally not be sufficient simply to state that you are appealing because you think the decision is wrong. You should give some reasons for your appeal although a few sentences may be sufficient. You are not expected to provide a long complicated explanation.
The TCO should acknowledge receipt of your letter of appeal in around 5 working days from when they log the appeal on their system. This time limit is somewhat flexible and depending on the time of year it can be much longer.
It is worth remembering that HMRC do not have power to decline to entertain a valid appeal, and jurisdiction over what is a valid appeal lies with the appeal tribunal, not with HMRC.
If you do not receive any acknowledgement from HMRC within a reasonable time, you should contact the Tribunals Service and ask them if you can list your appeal directly.
HMRC do not have power to refuse to accept a valid appeal or to strike out an appeal. If there is any uncertainty or dispute in this regard it is for the independent tribunal to decide, not HMRC.
Although you can in some circumstances make a late appeal, you should wherever possible ensure that you send your appeal to HMRC within the 30 day time limit and that you make allowance for any postal delays. It may be that you consider you do not have sufficient information or are unsure of something.
Rather than delay in making an appeal you should include a request with your appeal for the further information you require in your appeal and/or make it clear that you will make some further representations at a later date.
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Late appeals
You should always try to ensure that you lodge your appeal within the 30 day time limit for appealing. However if this time limit has passed, it is not necessarily fatal. Both HMRC and the First-tier Tribunal have a discretion to accept a late appeal provided it is made within 13 months of the date of the original decision.
If you are late appealing, you should explain why.
A late appeal can be accepted provided: --
- there are reasonable prospects that the appeal will be successful; and
- one of the following circumstances applies:-
- the appellant or the appellant’s partner or a dependent, has died or suffered serious illness;
- the appellant is not resident in the UK;
- normal postal services were disrupted;
- some other special circumstances exist which are ‘wholly exceptional and relevant to the application’ – e.g. It may be that you needed some help with understanding the determination notice relating to your case and found it difficult to find someone to help you.
Ignorance of the law is not in itself a good reason for appealing late.
The later you are in appealing, the stronger your reasons should be.
It may be that HMRC will simply accept and process your late appeal. If they do not do so, the question of the late appeal will be referred to the tribunal for immediate consideration. This will be considered by a tribunal judge but without a hearing. Therefore you should ensure that your late appeal request is as detailed as possible.
Late appeals can arise where an appeal against an award concerns detail relating to the calculation of your entitlement. Tax credit claimants are not given calculations with their award notices and will have to ask them separately. This information could be could be outside the 30 days allowed for appealing against the award. It is our understanding in such cases HMRC will generally not decline to accept a late appeal. Alternatively it could perhaps be argued that the 30 day time limit runs from the date on which you receive the additional information. But the only safe course is to ensure that appeals are lodged within the 30 day time limit.
If HMRC do not consider a late appeal to be in the interests of justice, they are not entitled to refuse to admit it on those grounds without first consulting the First-tier Tribunal.
Settling your appeal with the TCO
Once the appeal has been processed, someone at the TCO will contact you, usually by phone, to discuss your appeal. HMRC may agree a settlement of an appeal with a claimant, and that is what they generally aim to do in the first instance. Although you should consider the proposals carefully, you do not have to settle and you can apply to the First-tier Tribunal to have your appeal listed. You may wish to do so if, for example, the TCO delay unreasonably in progressing your appeal. If such a delay occurs you may also want to initiate the complaints procedure as described below.
If agreement is reached, the TCO will confirm it in writing, and amend your award there and then. If not, a date will be set for a hearing before the First-tier Tribunal. You do have the right to back out of any agreement you make with the TCO under this procedure, provided you tell them within 30 days.
The Tribunal Service's venue finder will give you some idea of where it is likely to be heard.
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The tribunal, its procedures and how to deal with them
In most cases, HMRC will collate the documentation relating to the appeal in what is known as the appeal bundle and will send copies to the tribunal’s administration office, the appellant and any representative nominated by him/her.
The appeal bundle will include a statement of HMRC’s case and the reasons for its decisions together with a schedule of the relevant statutory provisions and decided cases. It should also include copies of any other relevant documents including your application forms, any decision notices, correspondence, records of telephone conversations and any other letters or papers that you may have submitted.
A clerk in the tribunal office will send you an enquiry form which asks you to confirm if you wish to continue with your appeal. It also gives you the option of attending an oral hearing or having your case dealt with on the papers –what is known as a ’paper hearing’ where cases are dealt with without the parties being present. In most cases it is much better to request an oral hearing and attend the tribunal hearing. Generally speaking, the success rate of oral hearings is much higher than for paper hearings.
As with other documents, you should read the appeal bundle carefully and should not necessarily assume that it is 100% correct or complete.
You can if you wish provide a written response. If you wish to rely on any documentary evidence, you should send this to the tribunal office as quickly as possible, particularly if there are a number of documents or if there are some complicated issues to be considered. You should try to avoid handing in the documents on the date of hearing because either the tribunal could refuse to accept them or else could adjourn the case resulting in further delay.
Oral tribunal hearings are heard by a single judge. HMRC will not necessarily send a representative. The proceedings are fairly informal and bear little resemblance to the court scenes that you might have seen on television. The judge will start by explaining the purpose of the hearing and the relevant issues. The judge will take the lead role in asking questions although the parties and their witnesses will be given an opportunity to state their case, explain their points of view and to question one another.
The judge will keep a handwritten note of all the oral evidence. He or she will generally prefer people to speak in turn but if you have any concerns or cannot understand something, you are perfectly entitled to say so and indeed should do so at the time. The judge will try to ensure that wherever possible, those attending a tribunal hearing speak in ordinary everyday English. (Tape recording is being piloted)
A decision will generally be made at the end of the hearing. The judge has the discretion to send the decision in the post at a later date e.g. if the case is complicated or there is a great deal of evidence to consider. Usually a deferred decision will be made within a day or two and any delay will be minimal.
Along with your copy of the decision, you will be given a document which explains what will happen next, in particular where one party is dissatisfied with the decision and wishes to pursue a further appeal.
In many cases if you decide to withdraw your appeal before it is heard or before a decision is made, the tribunal will not object. However it does have the discretion to refuse any withdrawal request and decline so e.g. in cases where it considers that there has been some impropriety or where the issue in question is particularly important.
If you have good reason you can ask for an adjournment. If for example you are ill, have been let down by a representative or have unexpected childcare problems you should contact the tribunal office by telephone as soon as the difficulty arises.
Do not wait until the day or assume that once you have made a request, it will automatically be granted. If you have not received confirmation, preferably written confirmation that the adjournment has been granted, you should try if at all possible to attend on the appointed day. You should not assume that adjournments will be granted routinely and you do not have an automatic right to an adjournment.
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What happens if I am not satisfied with the Tribunal’s decision?
You have a right of appeal lies to the Administrative Appeals Chamber of the Upper Tribunal. If you have not done so already, you may wish to consider getting some advice, but this is not absolutely essential.
You can only appeal on a point of law and not simply because you disagree with the tribunal’s findings of fact. However, the term “point of law” is quite widely interpreted and can include circumstances where some evidence was ignored or not properly considered.
There is no automatic right of appeal. Initially you have to ask for permission to appeal. Only if this permission is granted can you pursue the appeal.
Before you appeal and within one month of the date on which you receive the tribunal decision, you should write to the tribunal office requesting a full written statement of reasons. You can ask for a statement outside the one-month period but should not assume that any such request will be granted unless there is a good reason for your delay.
In accordance with the new Tribunal Rules, you should be provided with a written statement of reasons within one month of your request being received at the tribunal office although in practice this can take longer.
When requesting a statement of reasons you should also ask for a copy of the tribunal judge’s written record of evidence.
Once you have received the statement, you should read it carefully. You should write your request for permission and your grounds of appeal and submit them to the First-Tier Tribunal office (not the Upper Tribunal) within one month of the date on the statement of reasons. You should also attach a copy of the statement and a copy of the decision of the First-tier Tribunal.
The grounds of appeal that you submit will be considered by a tribunal judge. The judge can set the decision aside if it is considered that it was incorrect. Alternatively this judge can exercise his/her discretion to give you permission to appeal to the Upper Tribunal. Alternatively the judge can refuse to give you permission.
If you are granted permission then the papers will be sent to the Upper Tribunal and you will be invited to make further written representations. If you are refused permission, you will be sent form UT1 which you must fill in an return to the Upper Tribunal within one month of the First-tier Tribunal’s decision to refuse permission to appeal.
Along with the form you must include the decision of the First-tier Tribunal refusing permission to appeal to the Upper Tribunal, the statement of reasons from the First-tier Tribunal and the original decision. A judge of the Upper Tribunal will then consider your appeal request and decide whether you should be given permission to appeal.
If you are granted permission to appeal you might be asked to provide further grounds or information. Sometimes the appeals are dealt with at an oral hearing although this is quite rare. In most cases an Upper Tribunal judge will deal with the appeal simply by considering the papers.
You have a further right of appeal to the Court of Appeal but only in very limited circumstances.
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Penalty appeals
If a penalty has been imposed on you for fraudulent or negligent mis-statement or delay in reporting a change in circumstances, or if you are facing a daily penalty, you can appeal to the First-tier Tribunal, which can do one of four things:
- set the penalty aside if it does not consider it was merited;
- confirm the penalty charged;
- if it considers the penalty is excessive, reduce it to an amount it considers appropriate, even to nil;
- if it considers it inadequate, increase it under the maximum permitted.
Appeal against the determination of the First-tier Tribunal lies to the Upper Tribunal who have the same powers in relation to the First-tier Tribunal's determination as the First-tier Tribunal has in relation to HMRC's determination. That is to say, they can set aside, confirm, reduce or increase the penalty.
An initial penalty for failure to comply with a requirement by HMRC, such as a notice to provide information etc, can only be imposed by the First-tier Tribunal on application by HMRC, and appeal against such penalties therefore lies to the Upper Tribunal.
For more on how penalties are charged, see Examinations and enquiries.
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'Official error'
This is not the 'official error' test as understood by those who have experienced tax credit overpayments due to HMRC error or delay. Official error in this context is defined as an error relating to tax credit made by:
- an officer of the Board;
- an officer of the DWP or Department for Social Development (in Northern Ireland); or
- a person providing services to any of those departments (eg the IT contractor),
to which neither the claimant nor any person acting for the claimant materially contributed.
A decision may be revised by reason of official error at any time within five years of the date of decision. Prior to 6th April 2010, the time limit was five years from the end of the tax year to which the decision related.
This is a useful alternative to an appeal where the only problem is a clear mistake in the award on which both sides can agree and which HMRC can simply correct retrospectively without the panoply of an appeal. There appears to be no right of appeal against a decision by HMRC not to revise the original decision under the official error rules.
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Where there is no right of appeal
There is no right of appeal against:
- a formal written request requiring the claimant to give HMRC information as part of an examination or enquiry; or
- a decision by HMRC to recover an overpayment (but do not confuse this with a decision by HMRC on an award which shows that an overpayment has arisen – such a decision is appealable like any other decision on an award). In this case a dispute is necessary to challenge recovery of the overpayment.
In such cases, if agreement cannot be reached with HMRC, it is possible to refer the matter to the Adjudicator or the Parliamentary Ombudsman.
In very exceptional circumstances you can make an application to the High Court to overturn the decision by way of the process of Judicial Review. (For more details about this process see the website of the Public Law Project). In such circumstances you should take legal advice as quickly as possible.
There is a three month time limit but in practice you are expected to start your case at the first available opportunity. If you and your advisors do not act quickly you could be refused permission to bring your case, even if you are within the three month time limit.
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Complaints and compensation
If HMRC has handled your case badly, there is a complaints procedure which also provides for payment of compensation if you have lost out financially, or suffered anxiety or distress, as a result of HMRC's error or delay.
HMRC's complaints procedure was originally set out in a code of practice, COP1. There have been numerous revisions of COP1 over the past few years, each one giving less information than its predecessor. The current version, which is no longer designated a code of practice, is in the form of a factsheet but, like many HMRC publications bearing that title, it is largely devoid of facts. The current factsheet version is available here.
Points to note about this procedure are:
- To make a complaint, write or speak to the person or office you have been dealing with, putting 'complaint' at the top of your letter if you are writing. You can also complain by fax or in person but not by e-mail. You are asked to tell them as much as you can about your complaint, including what went wrong, when it happened, who you dealt with, how you would like it settled.
- if the response of the local office is unsatisfactory, ask the office to look at your complaint again. It will be referred to a senior officer who has not been involved, who will take a fresh look at it and how HMRC have handled it, then give you a final decision. This second review is often called a 'Tier 2 complaint'.
- if you are not happy with the response of the senior officer, you can ask the Adjudicator to look into your complaint.
- If you are unhappy with the Adjudicator’s decision, you can also ask your MP to refer the matter to the Parliamentary Ombudsman .
Compensation
If you have suffered financial loss, or particular anxiety or distress, you should consider claiming compensation.
On financial loss, the factsheet says that HMRC will consider refunding any reasonable costs you have had to pay as a direct result of HMRC's mistakes or unreasonable delay. It lists, as examples, postage, phone calls, and professional fees. The former COP1 also listed under this head travelling expenses and financial charges. You should keep evidence of all such costs (receipts etc) and show them to HMRC when asked.
If the extra costs have arisen because HMRC mistakes or delays result in your receiving a late notification of a tax credit overpayment, the department may decide not to collect the full amount owed, but strict conditions apply.
On payments for worry and distress, the factsheet has this to say:
If you think our actions have affected you particularly badly, causing you worry or distress, tell us straight away. We may be able, in some cases, to make a payment to apologise.
The former COP1 added:
These payments, which are not intended to put a value on the distress you have suffered, will usually range from £25 to £500.
Under the former COP1 there was a third head of compensation for poor complaints handling:
'If we handle your complaint badly or take an unreasonable time to deal with it, we may pay you compensation, on top of any reasonable costs, to reflect this. These payments will usually range from £25 to £500.'
That paragraph no longer appears in the factsheet but there is no reason why poor complaints handling cannot be one of the factors to be considered in determining the amount of compensation for worry and distress.
If you are negotiating compensation for yourself, you do not have to accept what HMRC offer. Look at the case studies in the Adjudicator's annual Reports to get an idea of the kind of sums that are agreed after reference to the Adjudicator's office.
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TCO reorganisation
Since early 2009, the CSSG (Customer Service and Support Group) Teams within the Tax Credit Office have dealt with disputes, complaints and requests for explanations.
Helpful hints about appealing and making complaints
Some of these hints might seem very basic but they are important.
Be persistent
Many people often do not pursue concerns about tax credits either because they do not fully understand or they think it is too difficult to make an appeal. To a large extent, the appeals system, including the tribunal system, is designed to be used by members of the general public rather than professional people.
However, do not assume that the tribunal and/or HMRC will do everything and that all you have to do is turn up at an appeal hearing. HMRC might not submit some documentation that you consider to be relevant. If so you should be prepared to produce it yourself or else formally request HMRC to provide it. You can also invite the tribunal to order HMRC to provide the documentation.
Not only professional advisers but lots of people from all walks of life successfully pursue tax credits appeals, including those who do not have any legal qualifications. .
The tribunal and complaints systems are very user-friendly. You will not be expected to be able to conduct yourself like a lawyer. Tribunals have what is called an inquisitorial role which means that the Tribunal judge will usually take a lead role in identifying the issues and asking questions, rather than leaving this to the parties. All those attending tribunals are expected to behave politely and professionally and should not act oppressively or unfairly.
When appealing you do not have to pay a fee. You can also ask the tribunal in advance to ensure that it makes special arrangements for you e.g. if you require a hearing loop or wheelchair access. You can ask for your fares to be paid and in exceptional circumstances e.g. if you are significantly disabled and cannot attend a tribunal hearing by yourself, you can make an advance request that the tribunal pays for a taxi or minicab to transport you to and from the hearing.
Do not necessarily assume that promises or assurances given to you will be acted on quickly. The HMRC official you are dealing with may be very busy. You should therefore make sure that if necessary you chase up the officials you are dealing with and if still not satisfied, ask to speak to a supervisor.
Remember that the tribunal system is very busy. You should enquire from time to time to ensure your case has not been forgotten but you may have to be patient.
In the same way, keep in touch with any adviser that you approach and try to make sure that he/she does what has been promised and deals with your case efficiently.
Getting Advice
If you are unsure about whether you have a right of appeal or a legitimate complaint, try to find someone to help you read through the documentation and consider getting advice from a Citizens Advice Bureau (CAB) or other advice agency.
You should bear in mind that a lot of advice agencies are very busy and it may be a while before you can be given an appointment. If you go to a professional adviser, try to ensure that he/she has sufficient tax credits expertise to help you. Depending on your finances, you might qualify for legal aid assistance.
If you have an imminent appeal deadline, it would generally be better to lodge a short appeal and look for an adviser afterwards. Late appeals are not always admitted and you should not necessarily assume that yours will be.
Some advisers have facilities at their offices for disabled people or children. Some can arrange for an interpreter to be present or can speak languages other than English.
Having an adviser or someone to read through your documents with you may help you to understand your case better. An adviser can give you objective advice and can often be very reassuring, particularly if you have some difficult issues to deal with. However, you should remember that because of funding restrictions, quite a number of professional advisers are unable to arrange representation at tribunal hearings or important meetings.
Keeping records
You should keep all the letters or documents that you receive in a separate file together with copies of any letters that you send together with (if possible) proof of posting or any fax confirmation sheets. Make sure that you keep your documents in order and that they are easily accessible.
If you speak to any HMRC official on the telephone, ask him or her for a full name, department and extension number and try to keep a record of what is said. If any official refuses to give you his or her full name, ask to speak to a supervisor.
If you are alleging that you have suffered in some way or have incurred financial loss it will assist your case if you can provide documents such as receipts.
Reading Documents and writing letters
You should try to keep a record of all calls, even if you have been given a wrong number or put through to the wrong department. It might be suggested at some point that you have failed to get in touch or to respond when in fact you have been trying.
Make sure that you do your best to read all the paperwork that you are provided with, even if you do not think that it is very important.
Try to ensure that you keep yourself up to date and, particularly if you have a lot of documents, try to read them several times, especially if you have to attend a tribunal hearing.
If you cannot read a document e.g. because of a vision problem, you can ask for a large print or Braille copy to be provided. Similarly, if you cannot decipher a handwritten document, you can ask for a typewritten transcript and should do so at the first opportunity.
If you write a letter, make sure that you check it before signing and dating it and that you include any enclosures that you refer to.
If you fax a document or post it using a special delivery service, keep the notification or receipt.
Act Promptly and Observe Time Limits
If you receive a letter that requires a reply try to respond promptly. If you think that you may have to delay before replying you could make a telephone call and explain why.
Often, people with quite legitimate grievances are unsuccessful because they do not deal with matters until it is too late. It may be that an HMRC official would give you extra time to lodge your appeal or that a tribunal will grant you an adjournment.
However, you should never assume that any such requests will be granted automatically. You may have to demonstrate that you have done everything possible to progress your case, to comply with any directions made by the tribunal and to observe any time limits.
If you have to attend a meeting or a tribunal hearing, make sure that you arrive in plenty of time. Also read through your papers beforehand and make sure that they are all in order so that they are easily accessible.
If you have extra documents to submit to a tribunal, do not wait until the date of the hearing. Submit as many of them as possible at least 14 days in advance. If not, you may find that your case is adjourned and that at the very least you have made a wasted journey.
Also bear in mind that tribunals have a discretion not to accept documents provided late or at the last minute, particularly if there is no apparent good reason for this.
You should particularly ensure that you comply with any orders or directions that have been specified by a tribunal. If you realise that you will have difficulty in complying and you have a good reason, it is best to notify the tribunal office as soon as possible and ask for extra time.
Explain yourself
You should not assume that what is self explanatory to you will necessarily be understood or agreed by others. Therefore, whether writing a letter, speaking to a public official or giving evidence to a tribunal, try to explain what you mean. Explain what is meant by wording such as ‘I think this decision is wrong’ or ‘as a result of your delay I have suffered a lot of distress and financial loss.’
Similarly, if you request an adjournment from a tribunal you should explain precisely why are asking for one and what your difficulties are in full. Explain what you mean by vague terms such as ‘ill’ or ‘childcare difficulties’.
Consider your position carefully
Although you should not be put off appealing, you should consider matters carefully before you start the process. You should continue to do so at each successive step in the appeal process.
Negotiating
You can try and negotiate with HMRC at any stage in the appeal process. You do not have to wait for a tribunal hearing. An HMRC official might tell you that once an appeal has been lodged a decision can only be changed by a tribunal but this is not correct. HMRC has a discretion to revise a decision that has been made at any point before a tribunal hearing. There is nothing wrong with you contacting HMRC direct and trying to negotiate. Try to keep a written record of any discussions or telephone calls.
If as a result of the negotiation process, a decision is made in your favour which you are not entirely satisfied with, then you may have a fresh right of appeal that you should again exercise within the 30 day time limit.
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