Tax compliance is extremely important for small businesses. As keen as business owners are to avoid overpaying their taxes, they also understand that they need to be unimpeachable in the eyes of HMRC. Many small business owners outsource their tax affairs and compliance to accountants and bookkeepers. But ultimately, they themselves are accountable for their tax compliance.
When HMRC makes a decision that you disagree with, it can be a source of great anxiety and stress. However, you have the right to appeal to the tax tribunal. Here we’ll walk you through the process of appealing tax tribunal decisions.
What can I appeal against?
You can appeal against some decisions made about direct or indirect taxes. Direct taxes include income tax, PAYE tax, corporation tax, capital gains tax, National Insurance contributions, statutory sick pay, statutory maternity pay and inheritance tax. Indirect taxes include VAT, or customs and excise duty.
Indirect tax appeals can usually go straight to a tribunal, while direct tax appeals need to go to HMRC first.
Right of appeal examples
Listed below are some instances where you may have the right of appeal:
HMRC have altered your self-assessment after an enquiry because they believe you made a mistake.
They demand an excess of information during an enquiry or are taking too long to close their enquiries.
They have issued a coding notice that you believe to be incorrect.
They have disallowed a claim to a relief.
They have refused you a sub-contractor's certificate.
You want to dispute a penalty or surcharge that you believe to be incorrect or unfair.
When do I appeal?
You must appeal within 30 days of the date of HMRC’s notification of their decision. This usually comes in the form of a letter. However, it can also be a penalty notice, assessment or other document.
If you fail to appeal within this timeframe, you can still submit your appeal to HMRC or directly to the tribunal for late consideration.
How do I appeal?
Your appeal needs to be in writing, and you can either use your own letter of appeal or download a form. Your appeal must contain all of the following:
Your name / business name.
Your UTR (this will be shown on the HMRC decision notice).
The specific decision or assessment you are appealing against.
Your grounds for appeal (why you disagree with the decision.
What you (realistically) believe that the correct outcome of the case should be.
You should also enclose any evidence that might support your case for appeal. The more information you have to support your assertion that HMRC made the wrong decision, the more likely your appeal is to be successful.
What happens after I appeal?
After your appeal has been submitted, HMRC will consider your appeal and notify you as to whether or not they agree with you. In the vast majority of cases, you can expect one of the following outcomes:
HMRC agrees with your appeal and amends their decision in line with what you have suggested.
HMRC does not agree with your appeal, but offers to review their decision in light of the evidence you have provided. Your case will be subject to an internal review process carried out by another HMRC team to ensure impartiality.
HMRC does not offer to review their decision (but you can still ask them to review their decision at any time).
HMRC needs to discuss the case with you, and requests more clarification, information or evidence that will support your appeal.
If you are still unable to reach a satisfactory resolution with HMRC, this is the point at which you can make an appeal to the Tax Chamber of the First-Tier Tribunal. You cannot have a review from HMRC and a tribunal appeal at the same time.
The tribunal is a separate entity from HMRC. You can apply to appeal to the tribunal by visiting the GOV.UK website. Alternatively, you can download and fill in a notice of appeal form (T240) and send it in the post.
We can help
If you’re interested in finding out more about appealing to the tax tribunal, tax compliance, or any other aspect of your business finances then get in touch with our financial experts. Find out how GoCardless can help you with ad hoc payments or recurring payments.