Introduction to Tax Tribunals

The tax tribunals were created under the Tribunals, Courts and Enforcement Act 2007 and hear appeals concerning decisions by HMRC, the Border Force, the National Crime Agency (NCA) and the Welsh Revenue Authority. For Income Tax, PAYE, Corporation Tax, Capital Gains Tax, National Insurance contributions, Statutory Sick Pay, Statutory Maternity Pay, and Inheritance Tax you must appeal to HMRC before you can appeal to the tax tribunal. For ‘indirect taxes such as VAT, Excise Duty and Customs Duty you can usually appeal directly to the tribunal. Patrick Cannon has represented taxpayers in tax tribunals over many years and can attest to the fairness of the tax judges in applying the rules of procedure and the tax law.

What is a tax tribunal?

A tax tribunal is like a court of law with its own rules of procedure is independent of government and will listen to both sides of the argument before making a decision. With HMRC tax appeals there is no such thing as an HMRC tax tribunal as the tax tribunals are independent.

What happens at the First Tier Tax Tribunal?

Tax appeals are governed by the tax tribunal rules of procedure. A typical tax appeal hearing will begin with the taxpayer’s barrister presenting the taxpayer’s arguments in support of the appeal and then examining (or questioning) the taxpayer or any other witnesses who have put in witness statements to provide the evidence that the judge (and usually a panel member sitting with the judge) will find helpful in arriving at findings of facts and assessing the credibility of the witness. The barrister for HMRC may then cross-examine the witness and the taxpayer’s barrister may then re-examine the witness. The judge and panel member may also question the witness. HMRC’s barrister will then present HMRC’s arguments in reply to the taxpayer’s arguments. On occasions, HMRC will also produce their witness for example to prove that something was done or a notice was sent and on what date. The taxpayer’s barrister will then have the right to reply, to sum up the case for the taxpayer. The tax tribunal judge will then either give their decision or more usually, will reserve their decision for later and let the parties know roughly when they are likely to hand down their written decision. 

How to commence proceedings at the First Tier Tax Tribunal

An appeal is commenced at the First Tier Tax Tribunal by notifying the appeal using the online form. It is usually sensible to allow HMRC to deal with your notice of appeal to them first and accept an offer of an internal review of the original decision and only notify the appeal to the tribunal if the review decision upholds the original decision, but strictly speaking, this is not necessary.

What evidence will I need at my hearing?

It is usually a good idea to provide a witness statement or statements in support of the taxpayer’s arguments together with copies of any relevant documents such as notices tax elections photographs or any other relevant material. The aim is to persuade the tax judge to make findings of facts that support the taxpayer’s case. Once the judge has found the facts it is very difficult for either party to attack those findings of fact in any subsequent appeal to the Upper Tribunal or beyond. Witness statements are usually put in well in advance of the hearing by the tribunal directions governing the conduct of the particular appeal and either side may, and often will, require the witness to attend the appeal hearing to be questioned about their statement.

How do I apply for Permission to Appeal out of time?

The form for notifying the appeal to the tax tribunal has a box for applying to appeal out of time and for giving reasons why the appeal is late. 

Drafting Witness Statements:

• What is a witness statement?

A witness statement is a statement setting out the evidence that the witness will give to the tax tribunal in support of either party’s case. It is important to stick to the relevant facts known to the witness and to resist the temptation to argue points of law or to offer opinions. The function of the witness is to supply evidence of facts. Only expert witnesses if allowed by the tribunal may give opinions on specialist matters such as valuations or accounting standards.

• What should a witness statement contain?

Only facts within the personal knowledge of the witness should usually be in the witness statement but if the witness heard something indirectly from someone else they may recount this but it will usually be disregarded by the judge as hearsay evidence and less reliable.

• Who provides witness statements on behalf of HMRC?

Normally HMRC witness statements are supplied by officers of HMRC and may for example explain the history of a tax investigation, HMRC’s version of events or seek to prove that a notice was issued and when it was posted to the taxpayer.

What are the costs of The First Tier Tax Tribunal?

There are no tax tribunal fees to issue a tax appeal and in the First-Tier Tax Tribunal each side pays its costs including its barristers and the tribunal does not normally award costs against the loser, except when the other side has behaved unreasonably or has wasted the tribunal’s or the other side’s costs. 

What if I disagree with the decision made by the First Tier Tax Tribunal?

You can request the judge’s permission to appeal to the Upper Tribunal by setting out your reasons in writing. You must seek permission within 56 days of the decision you wish to appeal against. It is important to keep in mind that unless you think that the judge has got the facts so wrong that no reasonable judge could have reached the same findings of fact on the evidence presented to them then you must confine your grounds of appeal to errors of law in the judge’s decision.

Conclusion

The First-Tier Tax Tribunal is where most tax appeals begin and end so it is very important to ensure that your appeal is presented to the tribunal by a tax tribunal specialist in the best possible way to persuade the judge to find in your favour and against HMRC.

It is also very important to present the factual evidence with great care to maximise the chances of the judge making findings of fact and making value judgments that support your case. In this way, if there is an appeal to the Upper Tribunal, the facts as found by the First-Tier Tax Tribunal and the value judgments based on those facts will usually be taken as read and cannot be attacked by the other side.

Cannon Chambers has extensive experience in presenting tax appeals in both the First-Tier Tax Tribunal and on appeal to the Upper Tribunal

 If you feel that you could benefit from a direct/public access barrister, please contact Cannon Chambers for expert legal advice and representation.