Well i'm not sure when its gonna be or where its gonna be but ive just written to tax office to advise we want a listing at a 1st tier tribunal re a case. (re General Betting Duty).
Ive been to quite a few Commissioners meetings over the years but this will be my first time at the FTT.
Any experiences or advice anyone can give me would be much appreciated.
Are there any major differences from the old commissioners?
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Replies (33)
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First Tier Tribunal
I have sat on a number of Tribunals, and have represented a number of Clients too. The Tax Tribunal follows the old VAT Tribunal pattern. Although it equates to the previous General Commissioners or Crown Court in status, the Tribunal tends to be a little less formal.
Guidance from the Tribunal Centre explains the process; with the Appellant taxpayer going first, presenting evidence and argument; followed by HMRC response, and the Appellant concluding. You should receive correspondence from the Tribunal Centre giving location, date, time allowed (half day, day, etc).
cheers david; appreciate that
not sure if i wish id not seen it though!!! barristers??? yikes!!
i was once at a commssioners hearing years back where hmrc brought a solictor and he just spouted case law after case law after case law!!
ended up having a right ding dong and i thought id done enough but alas i lost that one!!
HMRC backed down before we got there
When I made an application to the FTT on behalf of a client, HMRC backed down and withdrew their assessment before it went any further!
fingers crossed
that would be a cracking result if that happened!
we're talking a reasonable amount of duty though here; £35k + being assessed.
did what i thought was a great appeal letter citing various reasons; no response for a year (no exaggeration),. thought it had all gone away and then it re appeared.
so. re hashed the appeal and got a nice apology for them missing the previous letter, BUT they've dug their heels in!
don't let the bxxxxxxx get you down!
If you think you have a good case, hang on in there!
:)
hey just piocked up on something...
is it better for me to apply direct to the tribunal service?
or..
do i wait until hmrc do it and advise me? ive written to hmrc today to advise that i want to go to tribunal but not posted the letter yet as im still in the office :(
Do just check . . .
Do just check the Tribunal rules about costs.
If you want to refer to the legislation have a look at Rule 10 of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.
In a nutshell you can be liable for the other side's costs if (a) you behave unreasonably - for example, pursuing a case to Tribunal when you obviously don't have a leg to stand on - or fail to do something which you should - for example, simply not turning up for the Tribunal hearing resulting in it having to be re-scheduled - (which I am sure you won't), or (b) the case is a "complex" one AND you lose AND you have not previously 'opted-out' of the costs regime. There are time limits for opting out of the costs regime.
Obviously if you have opted out of the costs regime in a complex case and you win, then you cannot recover your costs from the loser.
Unfortunately you have to decide on opting out BEFORE you get to the hearing!
The case in which I was involved was one involving issues both of fact and of law and (as far as I am aware) some of the issues of law were ones which had never previously been decided by a Tax Tribunal. So it was, in that sense, somewhat ground-breaking. Hence the teams of lawyers on both sides. The hearing took three days (two days of witness evidence and a further day of legal arguments). There were four lever-arch files of documents relevant to the case in front of the Tribunal.
So it may not have been a typical FTTT case.
If your case depends upon an interpretation of the statute and case law (rather than on factual matters, such as the reliability of the taxpayer's records) then it might be worth getting a lawyer instructed to put the case before the Tribunal.
David
Keith Gordon's book
You may also be interested in Keith Gordon's book on Tax Chamber Hearings, which is clear and very practical. A review is due to be published here on AccountingWeb in the near future, but it has already received good reviews elsewhere.
(Yes, I have a vested interest, as my company published it. But it is directly relevant to your question, so it would have seemed silly not to mention it. Keith's reputation - as both author and tax specialist - does not need my help anyway.)
Ray
Many many thanks
Many thanks to everyone that has contributed to this thread. I've still got a lot of stuff to read through.
I've actually hung fire posting the letter tonight in view of this thread and want to be 100% sure that this is the best option. I've been given the option of an internal review by HMRC but was gonna swerve that and go straight to tribunal; not so sure now.
My appeal is based purely on facts of the case; no legal argument.. I was hoping HMRC may take a common sense and fair view (naive or what!) but unfortunately they are pursuing the directors personally for unpaid duty re a limited company which is now dissolved.
Basic facts:
Limited company traded as a bookies from premises. Directors had other business interests and this venture was borne out of a general background of betting and enjoying the races. They did not register for general betting duty as they were completely unaware such a thing even existed.
Everything else was spot on; awp licences, gambling commission, horse racing levy board etc etc
Company lost money due to small shop and area and competitor down the road. Made gross profit on bets but net loss after overheads. The directors never took any remuneration from business and had to inject funds as and when required.
Business stopped trading due to continual losses and company was left to dissolve informally by companies house.
The shop down the road came up for sale so our client teamed up with another guy formed a new limited company and acquired the shop. By this time the old company is struck off.
Within weeks of new shop being opened HMRC come in check that awp licences are in place and mention registration for general betting duty. Our clients explain they've never heard of it and register and in the course of the conversation the other shop comes out. HMRC then raise assessments based on the accounts prepared.
I submit appeal based on various grounds;
1. Client was not aware
2. Registration of machine licence was known to HMRC and n fact both duties are covered under same Act.
3. Memorandum of understanding exists between HMRC and other bodies to ensure compliance.
4. HMRC have a procedure in place to ensure registration as demonstrated by visit to new shop
5. Directors never took a penny out and therefore not fair to pursue personally when they have not personally profited.
6. Business would have folded earlier if a further 15% was coming out of the business.
7. Business was dissolved prior to frost contact from HMRC so clearly not done to try and avoid the duty.
About a month after that letter a vat collector turned up unannounced at the new shop. I flew down there and gave him a copy of the appeal letter and all collection stopped.
Nothing was heard for over a year and then it all crops up again so I resent the appeal letter and recently received the reply saying they want it all paying plus a 35% penalty on top.
So we all know we are fighting a losing battle but stranger things have happened.. I've won a couple of commissioners cases when the chips were really down including one re opened by the same panel that had previously determined the case when the previous agent failed to turn up. When the chips are down I tend to absolutely crucify HMRC over every little misdemeanour to demonstrate their ineptitude and I won't be hard to do that in this case.
Fact remains the business took bets and did not pay duty, albeit unintentionally, but in my opinion it is extremely unfair to pursue the directors personally.
Directors just want their point of view to be heard and for HMRC to acknowledge their shortcomings. If we get a result at the same time then that's a bonus.
Keith Gordon
@fawltybasil2575 Not upset at all! I have heard good things about that book as well. But I must just add congratulations to Keith Gordon on being awarded Tax Writer of the Year this evening (since my earlier post).
Ray
Don't apologise basil
I really appreciate your input and everyone else's.
This for me is what this forum is all about.
The reason they are chasing the directors personally is purely because the statute says they can. It was quoted at the outset.
The delay from HMRC was simply an oversight and they have acknowledged such in their latest letter.
I fully agree that them being unaware is a weak argument but if its clear that if our client failed in their duties then HMRC also failed in theirs. At present they won't even acknowledge that.
My 30 days expires next week so I'll mull this over during the weekend break but after posting this today I'm edging towards the internal review.
I do expect this will end up at tribunal eventually though as our clients want to have their say; and to be honest when it gets there I will enjoy making whoever represents HMRC squirm in their seats!
Again, many thanks for your thoughts and comments.
Mitigation
. the view put forward that these "racing" aficionados were unaware of Betting Duty is surely not a credible argument ( quite regardless of its not being a valid point in any event).
Not sure that I agree with that view. Tax law is extremely complex, as “Any Answers” proves even accountants don’t know it all, so it is perfectly reasonable that the OP’s clients may well not have known about betting duty.
On it;s own ignorance may not be a defence, but, when added to the fact that HMRC clearly knew they were trading as bookmakers and failed to ensure that they were registered for ALL taxes due, it would seem to provide a persuasive argument in mitigation. Possibly sufficient to at least quash the claim for penalties.
No harm in a review
I cannot see that there would in any harm in opting for a review. You can still appeal the assessments after the review has been completed.
Would you be appealing the duty or just the penalty?
Are you saying that HMRC have miscalculated the figures or are you just arguing that - on grounds of fairness and because of HMRC delays - the assessments should be reduced / cancelled?
It seems to me that you are saying the facts are not in dispute in that - had your clients and HMRC done everything appropriate at the proper time - the duty assessed would be the figure which HMRC are now seeking. Is that correct or have I misunderstood your position?
If I have understood your position correctly, I suggest your appeal is based entirely on points of law rather than points of fact.
I would suggest you get some legal advice from a tax barrister before going to Tribunal.
David
David....
I'm appealing the lot.
The assessments raised were purely 15% of gross profit shown in accounts. Not arguing the actual figures.
The delays are annoying but it's the fairness angle I'm really coming from. I genuinely think that after year one this business may have folded as it made losses anyway, and the additional duty would have made the losses quite significant. Again it all boils down to our clients lack of knowledge about the duty, but it galls me tremendously that there were machines in there fully licenced in accordance with Betting and Gaming Duties Act 1981 yet the betting duty covered by the self same act was not brought up by HMRC.
Machine licences are pretty well known to the general public as every working men's club in the country has one on display; general betting duty however is less well known.
In fact it is so less well known that HMRC implemented a memorandum of understanding re information sharing between themselves and the gambling commission.
Internal review seems the option at this stage and I thank everyone who has helped me out on here because it is this thread that stopped me posting the letter I drafted this morning.
I may well be facing a losing battle but when I see something as unfair as this I feel duty bound to pursue it so I'm prepared for the long haul.
Where Eagles Dare
If you don't have a solid legal argument(s) you will be eaten alive. You need to know when to cut your losses. If this is not your field hire a brief. In long run will save money. HMRC review is good idea. Don't forget even if you win at FTT HMRC can appeal and then costs get serious.
Going down fighting
See here: http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm535055.htm
Unless you can give legal reasons why Section 5B (3) of the Betting and Gaming Duties Act 1981 should not apply, your case seems slim, at best...
So.....
Are we saying that the difference between the old commissioners and the new FTTT is hat the latter bases all its decisions on legal facts?
Because in the past I've won at commissioners purely on the basis of fairness and common sense.
Fairness and common sense
It's a personal opinion, but I suggest the short answer to your question, "Can I win this case at the FTTT purely on the basis of fairness and common sense?" is "No".
You are proposing to appeal against an assessment which you believe is correct - or would be correct if the clients and HMRC had done what they should have done at the appropropriate times. You do not dispute the figures, the person to whom the 'bill' is directed, or the validity of the assessment (for example, you do not suggest that it was raised outside the statutory time limit). Your argument is that, in fairness, HMRC should not have raised it at all.
Technically, you are suggesting that the client had a 'legitimate expectation' that HMRC should have made him aware of the liability to the duty at an earlier stage and, having failed to do so, should not now assess it.
It is seriously open to question whether the FTTT could, even if it agreed with you, entertain an appeal from your client on those grounds. It is arguable that the client should instead initiate proceedings for a judicial review in the High Court of HMRC's decision to assess this duty.
It might be suggested that the best course of action would be to initiate both an appeal to the FTTT and an application for judicial review in the High Court and then request that one of these by stayed (probably the FTTT appeal) pending the resolution of the other.
The High Court proceedings could be conducted by the client in person or he could be represented by a lawyer (but you would not be permitted to present your client's arguments in the High Court).
There are strict time limits on initiating the High Court application.
My own view is that your chances of success in appealing the assessment are comparable to those of the proverbial snowball in the fires of hell. But it's up to you.
Do be aware that, should you lose, you (or your client) may be held liable for the other side's costs - particularly if your appeal is considered to have been an unreasonable one (for example, as being utterly devoid of any merit or prospect of success).
I would urge you to seek specialist advice before initiating any proceedings in the FTTT or the High Court in relation to an appeal against the assessment.
An appeal against just the level of penalty is however an altogether different matter. If you feel the penalty level is too high then you could appeal just the penalty to the FTTT.
Good luck in whatever you decide.
David
wow!
thanks for you thoughts on this basil.
really appreciate the length of time youve gone to there to reply.
the current position is that i have to get a letter off today or tomorrow due to the 30 day limit.
Ive decided it will be initially the internal review while we have a further think.
Ive been trying to speak to the Inspector but he's constantly out of the office and not replying to my e mails.
This position all came to light with a random unannounced visit to the new shop and I want hmrc to advise what procedures are in place that instigated the initial visit as clearly these failed re the old shop.
UPDATE
Just an update for anyone thats interested.
Ive drafted a bit of an epic letter to HMRC today asking for an independant review (e mailed it to client for approval so not sent it yet).
Did not get a call or e mail back from the guy at HMRC who made the original decision. very disappointing but par for the course.
Based on advice on here Ive appealed against the duty and penalties separately.
Ive also offered "without prejudice" to pay period 1 of the assessment which totals arond the £10k mark in the interests of fairness as if the registration had been done retrospectively within a reasonable time scale (either by our client or hmrc discovery) then the first period would have been riden out and paid by the directors.
Ive lost count of the number of times ive read the Gambling Act 2005 and the Gaming & Duties Act 1981 and theres no doubt the basis of the assessments have complete legal foundation in accordance with those acts.
Theres a slight grey area as to the legal definition of the word "may" which is used to say who HMRC can chase for the debts. As opposed to "shall" when it referes to the actual bookmaker.
it does kind of infer that perhaps hMRc has the powers to mitigate the debt due to the extraordinary circumstances. (ever the optimist!)
So basically after 6 pages of argument I have requested that the review take consideration of all the facts even those not covered by the actual legislation.
The offer has been made on the basis that the business would have ceased to trade (in all likelihood prior) but at the latest the end of period 1 being assessed due to the adidtional losses and injection required by the directors, and on the basis that we do not think it unfair to assume that HMRC Gambling Duties Team, if operating efficiently within their powers, and within the puposes of the Memorandum of Understanding with the Gambling Commission (underpinned by s30 and 350 of the Gambling act 2005), should have assessed this duty long before the eventual discovery was made.
As i think David said above "snow balls's chance in hell" but for the sake of a letter we'll see where we go from here.
Ive been reading a few Tribunal summaries and its clear that the judges absolutely loathe the "have my day in court" brigade and invariably offer costs to HMRC in those cases (again david and i think Basil refer to this). Not stumbled on one yet though where HMRC actually take up the offer!!
Ive told the clients about the potential for associated costs and being destroyed in a legal arena without a legal argument and I await their response. Pretty sure though that we will still be going the distance on this and I suppose from a selfish point of view going to one with a 0% chance of winning takes the pressure off and at least gives me the opportunity to see how they operate.
Thanks again everyone that has contributed; some invaluable advice given.
:)
Thanks for the update
Ned
Thanks for the update.
In your travels through FTT tax cases you probably came across THIS ONE. The circumstances are very different from your case in that the taxpayer disputed the figures assessed in respect of income tax and betting duty. But there is some potentially informative legal background in the judgment.
As you can see, in that case the FTT agreed totally with the assessments and penalties claimed by HMRC (but, I repeat, the facts and the dispute were very different from your case).
David
Cheers david
No I didn't find that one!
I used the search facility and concentrating on gambling and the like; perhaps this one was indexed under the mainstream tax.
Makes for good reading
Have you shot yourself in the foot?
Ned
I have been preparing indirect tax cases to the Tribunal for about the last 10 years. I am concerned that you have asked for a review and separately appealed the HMRC decisions to the Tribunal. Can you clarify? Section 15C (6) Finance Act 1994 as amended a few years ago now prevents HMRC from conducting a review when an appeal has been lodged. You must seek a review first and then if the review officers upholds the officer's decision then lodge an appeal.
I think everyone agrees that on the facts of the case you have 0% chance of success at the Tribunal. Your best opportunity would lie with HMRC to have the penalty mitigated. Incidentally my firm would only instruct tax barristers to present cases at the FTT since HMRC, with indirect tax cases, use barristers. It is a totally different ball game to Commissioners meetings. HMRC indirect tax do not 'do deals' when the amount due can be easily calculated unlike their Revenue counterparts.
As a sobering thought HMRC released figures for 2010-2011 which showed only 21% success rate for taxpayers. Rorkes Drift may be a better site for you to try and defend your client. I hope you get paid in advance
Malcolm McFarlin
rorkes drift!
Ned
I have been preparing indirect tax cases to the Tribunal for about the last 10 years. I am concerned that you have asked for a review and separately appealed the HMRC decisions to the Tribunal. Can you clarify? Section 15C (6) Finance Act 1994 as amended a few years ago now prevents HMRC from conducting a review when an appeal has been lodged. You must seek a review first and then if the review officers upholds the officer's decision then lodge an appeal.
I think everyone agrees that on the facts of the case you have 0% chance of success at the Tribunal. Your best opportunity would lie with HMRC to have the penalty mitigated. Incidentally my firm would only instruct tax barristers to present cases at the FTT since HMRC, with indirect tax cases, use barristers. It is a totally different ball game to Commissioners meetings. HMRC indirect tax do not 'do deals' when the amount due can be easily calculated unlike their Revenue counterparts.
As a sobering thought HMRC released figures for 2010-2011 which showed only 21% success rate for taxpayers. Rorkes Drift may be a better site for you to try and defend your client. I hope you get paid in advance
Malcolm McFarlin
ha ha love the Rorkes drift comment!
thanks very much for your input Malcolm.
Just to clarify; i started this thread when I was 99% sure i was going straight to tribunal but given some of the responses I changed my mind at the 11th hour and have asked hmrc for an internal review.
I am actually surprised that taxpayer success rate was as high as 21% given the literature ive read.
FURTHER UPDATE
I have today received an e mail from the guy at hmrc who made the initial decision and he has confirmed to me that the discovery at the new shop (which subsequently resulted in the discovery of the old shop), was made due to the information sharing arrangement covered by the Memorandum of Understanding between HMRC and the Gambling Commission. I think thats good news as far as my appeal is concerned but still expect to be told th figures stand.
Time will tell and I'll post on here as things develop.
Continuing thanks to all contributing and taking an interest
Book review
AWEB invited me to review Keith Gordon's book "Tax Chamber Hearings: A User's Guide".
You might be interested in the review which is HERE.
David
Current position
For anyone interested I am promised a reply to my request for internal review by 15th August.
next update
although this thread seems lost in the history of time i'll keep it updated as promised;
the 15th came without correspondence but then i received a phone call on nthe day from the reviewing officer asking for a further 2 weeks.
i asked what would happen if i said no and he said if i did that the original decision would be upheld and i'd have to appeal to tribunal!!!
so basically the 45 day deadline they allowed themselves meant nothing; the date of 15/8/2013 mentioned above was actually 2 weeks after the original original due date for reply. i allowed them an extension initially and now theyve come back for another.
anyway after speaking to the guy on the 15th he sent me an e mail just to put on record that ive accepted an extension to 29/8/2013; he then phoned again today all flustered asking if he'd actually spoken to me about the further 2 weeks!!!! Poor guy must be rushed off his feet. I get the feeling that today is the first day he's actually picked up the case to look at it which is a bit disappointing but i suppose we've all been there at some stage.
So the official due date for a reply is now the 29th August but from speaking to him today i think he's got his head on it and i think i'll get reply before then.
Im expecting the usual rubbish churned out wherre its blatantly obvious that no one has even spent the time to go through things but ya never now! all i want is for my correspondence to be given a fair reading!
oh.... and actually hmrc acknowledging their own shortcomings in all this might actually go a long way to our clients just taking this on the chin if the expected thumbs down verdict is returned. failure to even acknoweldge a bit of fault will no doubt see me slavering in front of god knows who at a tribunal!!!!!
:)
Thanks
Thank you for keeping us updated, this is very instructive (at least for me). Please let us know where this goes as I could be in a similar situation (dealing with a review etc...) pretty soon,. Thanks again
So....
Finally got the letter today which basically re hashes the relevant legislation which I was already aware of and in fact much of which was in my correspondence.
Half the points raised in my last correspondence haven't even been considered or if they have there's no reference to them.
It's so vague I'm not even sure whether my latest letter has even been passed on to the reviewing officer.
No admission of any fault whatsoever by HMRC and they are simply hiding behind the fact that all the information is on the HMRC website!
So the assessments and penalties stand in full and I await a meeting with the clients to see whee we go from here
tribunal
literally just filed by e mail the appeal to the tribunal; had a right struggle to meet the deadline to be honest; mainly cos hmrc wrote to client telling them I had a copy and they didn't send me one. I only got the letter when I actually e mailed the guy at hmrc for an update. its funny but when I read through the various correspondence the case looks fantastic on a common sense basis but when you read the legislation it looks doomed (as predicted by many on here). clients do not want specialist/barrister basil; they want me :( so.....................into the lions den I go; kind of looking forward to the experience but also there's a fair amount of trepidation as well