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Tax tribunal shows joined-up thinking is difficult | AccountingWEB | Person getting frustrated hides under laptop waving a flag saying help

Tax tribunal shows joined-up thinking is difficult


Jake Smith is let loose on a recent stamp duty tax tribunal case and he questions: Why, oh why, can’t government departments be more co-ordinated?

22nd Feb 2024
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A recent tax tribunal raised during our weekly editorial meetings highlights so much that is frustrating and often plain wrong about dealing with officialdom and bureaucracy. 

I think the comment I made that got me this writing commission from the editor was along the lines of: “Why oh why can’t things just be joined up?” It’s something that I’m sure gets asked around dinner tables, pubs, offices, editorial conclaves and most other locations where people gather to chat. 

Whilst I’m sure that not every exhortation to this effect (I’m trying not to use the term rant!) revolves around tax tribunals, the common theme of lots of these pleas is, “Why can't people just see the bigger picture?” I think the answer is that it’s often very difficult to do so. Even though it may seem easy from your perspective, you may not be aware of all the rules, traditions, counterarguments and conflicting priorities that have led to the current process. 

It’s very easy to be frustrated when bureaucracy affects you or your business. Certainly, I found it unbelievably frustrating trying to juggle the often conflicting requirements of building control, planning departments and conservation officers when trying to get permission to replace some horrible '70s windows on our house a few years ago. 

But enough about my problems. I will accept that when the boot is on the other foot, it can be hard to take on board everyone’s ideas. We’ve probably all experienced times when a decision made by committee, or a design, a piece of writing, running an event, or even cooking, is very hard once too many people are involved. The end result is often a bit too much of a compromise and no one ends up really happy. I’m not calling for a dictatorship or even a benign dictatorship, but a realisation that we need to try and do more to encourage collaboration and joined-up thinking.

Challenges of dealing with multiple departments

So onwards with the tax case which really highlighted the challenge of dealing with different government departments and no doubt left the poor taxpayer feeling frustrated and likely out of pocket. 

As described in a recent first tier tribunal (FTT), Mr Smith (no relation to this writer!) had bought a property with his wife in February 2020. Mr and Mrs Smith paid stamp duty land tax (SDLT) of £21,000, which was calculated at the residential rate for a single dwelling house and an annexe. 

The property has two front doors and two kitchens, but a single supply for each of the utilities, a single boiler, a shared garden and the annexe does not have a separate house number (or postcode). Mrs Smith’s parents later moved into the annexe in February 2021.

Before that happened though, in June 2020 the Valuation Office Agency (the “VOA”) contacted the council taxpayer at the “Annexe at” the Property address and said that they had made a new entry on the council tax list for the annexe as they believed the property comprised two dwellings for council tax purposes: the “main house” within Band E and the annexe within Band A.   

Around this time a firm of property tax accountants, Relatus Limited (“Relatus”), contacted Mr and Mrs Smith and informed them that as the property had an annexe they were entitled to claim Multiple dwelling relief (MDR) from SDLT and could obtain a refund from HMRC of overpaid SDLT. Mr and Mrs Smith instructed Relatus as their agent to make this claim. 

The claim was duly made in February 2021 for a refund of £10,000 as Relatus had calculated the SDLT liability should have only been £11,000 as a result of MDR.

HMRC refunded the £10,000 to Relatus as the agent. Relatus retained a fee or commission from this, and the balance was paid to Mr Smith. Mr Smith’s evidence was that HMRC had agreed at this time that the SDLT had been overpaid by him and his wife. The judge, who found Mr Smith to be an honest and credible witness, accepted that this was Mr Smith’s honest understanding; but this was, in fact, not correct, and was simply that HMRC’s approach with cases such as this is to process returns, including amended returns, and checking such amendments subsequently. 

Our consulting tax editor Amy Chin wrote about the fact that this process now, check later approach can lead to problems for taxpayers. Although there is no evidence that Relatus is a rogue agent, it seems Mr Smith was not aware that the refund could still be, and indeed eventually was, clawed back later if HMRC did not agree with the revised SDLT calculation.

Confusion reigns

Shortly afterwards, Mr Smith challenged the local authority's decision on council tax banding.  He wrote to the VOA on 20 March 2021, and the VAO responded on 1 April 2021 with information about how they assess council tax bands and additional information that could be provided as to alterations that had taken place to enable them to determine the position. 

The VOA referred to the test being whether a property contains more than one “self-contained unit”, and the definition means “a building or part of a building which has been constructed or adapted for use as separate living accommodation”. They said that the Property was originally a much smaller detached bungalow and that, following extensions and alterations by a previous owner, it was now a three-bedroom house with an annexe.  The VOA decision notice (which was issued on 1 April 2021) confirms that the annexe provides self-contained living and has to retain a separate council tax banding from the main house.

So it would seem a safe bet to assume that Mr and Mrs Smith had bought and owned two self-contained properties, the house and the annexe, rather than one then? Sadly for Mr Smith, HMRC disagreed. 

On 26 October 2021, HMRC sent letters to Relatus and Mr and Mrs Smith to inform them that they were checking the amended SDLT return. 

On 10 January 2022, after various correspondence, HMRC sent “pre-closure” letters to Relatus and Mr and Mrs Smith, and on 21 February a closure notice informing them that HMRC considered that neither the main house nor the annexe was suitable for use as a single dwelling, MDR was not available, and SDLT of £21,000 should have been paid. This meant Mr Smith was required to pay the £10,000 SDLT that had provisionally been refunded.

Relatus sent a response on 28 January 2022, addressing the points made by HMRC, including in relation to shared utilities, access and the shared garden. HMRC however, issued a closure notice on 21 February 2022.

Although Relatus appealed on behalf of Mr Smith, eventually on 10 June 2022, the reviewing officer upheld the previous closure notice. On 1 July 2022, Relatus emailed HMRC and asked that the matter be closed so that a formal repayment plan could be set up for Mr and Mrs Smith. 

Seemingly accepting the HMRC decision, or perhaps at least accepting that it was a dead end, Mr Smith then emailed the VOA on 24 August 2022, challenging the VOA’s decision that the annexe should have a separate banding for council tax.  

In his email, Mr Smith referred to HMRC’s decision for SDLT purposes and questioned the difference between the decision of HMRC and that of the VOA. Mr Smith also later asked his local councillor for assistance in light of the different conclusions being reached by HMRC and the VOA.  

Not connected

On 31 March 2023, the councillor wrote to HMRC, copied to the VOA, and asked for alternative dispute resolution (ADR) on the basis that the two parts of government were not synchronised. The VOA replied on 21 April 2023, stating that the statutory responsibilities of the VOA and HMRC are completely separate, referring to the terms of The Council Tax (Chargeable Dwellings) Order 1992, and setting out that there had been a right to appeal the VOA decision to the valuation tribunal within three months of the VOA decision of 1 April 2021, and recommending that Mr Smith approach the valuation tribunal and ask them to consider an out-of-time appeal.  

HMRC replied on 5 May 2023, explaining that there were differences in the legislation applicable to SDLT and council tax, so there will be situations where the circumstances result in different outcomes. 

Mr Smith notified his appeal to the tribunal on 17 May 2023; however, the FTT found that this was too late. HMRC’s review conclusion letter was dated 10 June 2022 and Mr Smith had 30 days beginning on that date to notify an appeal to the Tribunal. The appeal was made to the tribunal 10 months after the expiry of the statutory time limit. The FTT described this as a serious and significant delay. 

Mr Smith’s notice of appeal to the tribunal gave as “Reason for late appeal” that the SDLT claim and VOA local tax banding issue had been going on for some time and were saying the opposite of each other. He provided further details of the banding issue, the repayment of SDLT, HMRC’s subsequent decision that the annexe was not a separate dwelling, and the appeal to HMRC. He considered the outcome very unfair, and wanted “common sense to prevail”. 

At the hearing, Mr Smith explained further: 

  • He did not know of the process to appeal to the tribunal; once they received the review conclusion letter, Relatus was telling them they couldn’t do anymore. 
  • He was frustrated with the situation and tried to persuade the VOA to follow HMRC’s approach. 
  • They suffered a family bereavement in November 2022, after a period of illness, and this had been very difficult for them. 

HMRC submitted that: 

  • The explanation provided as “Reason for late appeal” in the notice of appeal does not explain why Mr Smith did not appeal within the prescribed time period. 
  • Mr Smith had been represented throughout the enquiry and until 1 July 2022. 
  • The review conclusion letter had been sent to Mr and Mrs Smith as well as to their agent and that letter set out the right to appeal to the tribunal and the time limit for doing so. They could have checked the position themselves. 
  • Mr Smith had not previously told them of the family bereavement. 

Sympathy from the judge but appeal denied

The judge ruled that: “As to the reasons for not appealing in time to the tribunal, I have considerable sympathy with the position in which Mr Smith found himself, both as regards the distressing period of family illness but also being faced with inconsistent decisions from HMRC and the VOA. He does not appear to have been helped by the advice received from Relatus in this regard, which he understood to be telling him that there was nothing further that could be done.”

“However, I consider it is significant that Mr and Mrs Smith received from HMRC the key correspondence in this matter; they had seen throughout the arguments being advanced, received the review conclusion letter (which sets out the right to appeal to the tribunal and the relevant time limit) and also HMRC’s response on 4 July 2022 to Relatus’ email which set out that HMRC had been told they no longer wished to pursue their appeal.“

“It should have been clear from this correspondence that there was in fact an appeal right which remained open to them. Instead, Mr Smith chose to restart communications with the VOA (in August 2022). This was pragmatic, but he could have kept both routes open. 

“Overall, I am not persuaded that he had a good reason for failing to notify his appeal to the tribunal within the required time limit.”


So, unfortunately, Mr and Mrs Smith find themselves on the wrong side of both of the decisions. No MDR from HMRC and two council tax bills to pay, as well as presumably having paid Relatus for the work done on the initial SDLT claim. 

An unfortunate and no doubt frustrating position, where both government departments claim they are upholding their rules correctly yet neither feels the need for any commonsense or pragmatism. Why, oh why indeed?!


Replies (5)

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By richard thomas
22nd Feb 2024 19:17

What makes it worse is that, contrary to the impression given by the article, the VOA is actually part of HMRC.

Thanks (4)
Replying to richard thomas:
By Roland195
23rd Feb 2024 09:49

Thankfully Mr Smith didn't also buy a Double Cab Pick Up or he'd potentially have had three more functionaries from the Federation of HMRC Fiefdoms to deal with, playing by their own rules.

Thanks (1)
Replying to richard thomas:
Jake Smith, AccountingWEB
By Jake Smith
23rd Feb 2024 11:38

Thanks for the correction Richard, I didn't realise that the VOA was part of HMRC, a quick google search confirms that to be the case. Doesn't seem to have helped the appellant though. I agree, it must make the outcome even more frustrating that they can have such different interpretations. It reminds me even more of my Gordian Knot with the planners, but thankfully for me, unlike the Mr Smith in this tribunal, I did manage to convince the three parties I was grappling with to see sense and we now have double-glazed wooden box sash windows!

Thanks (1)
By Justin Bryant
23rd Feb 2024 09:05

Ralatus have previous for this (with such an odd name it's easy to find them on Bailii). See:

I'm surprised DN has not picked that up.

Apart from that, the above article seems a bit misconceived (to me at least), as an annex that has its own separate council tax banding does not necessarily qualify for MDR (I can think of lots of reasons based on MDR case law why not- see: and I think that was alluded to by the FTT here (or at least elsewhere).

Thanks (0)
By Postingcomments
23rd Feb 2024 09:07

It seems that almost everyone who ends up at a Tribunal has suffered a bereavement which seemingly left them unable to function. Another one here. Chalk it up!

Thanks (1)