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HMRC abuse of Appeals process

20th Jun 2018
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This FTT case is further evidence of the way HMRC have abused the Appeals process.

We already suffer the indignity of HMRC Officers’ ignorance of VAT statute and case law. HMRC send too many letters which should explain the relevant legal issues but are incoherent cut-and-paste documents. And this case indicates that poor practice is spreading.

Most VAT Appeals put the ‘burden of proof’ on the taxpayer. He has to prove his case before the Tribunal. However, Tribunal Rule 25 provides that HMRC (the Respondent) must provide a statement of case:

(2) A statement of case must – (a) in any appeal, state the legislative provision under which the decision under appeal was made, and (b) set out the respondent’s position in relation to the case.

So, HMRC has to provide clear reasons why the taxpayer is wrong. In Allpay Ltd, HMRC tried to hide behind the ‘burden of proof’ argument, and merely stated the taxpayer was wrong! The Tribunal strongly criticised HMRC on this point.

The Tribunal commented that this simple, and long-accepted process, is to avoid either party ambushing the other in the Hearing.

What is even more frustrating in this case is that the taxpayer seemed likely to lose on the substantive issue. He seems therefore to have wasted substantial funds in pursuing a hopeless case. Had HMRC put their case more clearly at the proper time, he could have withdrawn earlier.

You can read this unsatisfactory case here: http://www.bailii.org/uk/cases/UKFTT/TC/2018/TC06503.pdf

 

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