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Hmmm
I struggle to see how it would be of benefit to Taxpayers.
One can only assume that decisions will be based on the existing HMCE Tax Manuals which are known to take an interprative view of existing Tax Law.
It looks more like a way to discourage the taxpayer from going to the Commissioners since the TaxPayer will no doubt be told "Well, you lost here, the original assessment was correct. If you try and take it forward the penalties will be much worse".
Having watched certain IR35 and S660a cases being handled I struggle to see how this could ever favour the taxpayer.
Taxpayer;s Advocate
The suggestion by Robert Maas for a taxpayer's advocate, as set out in a recent Taxation article, becomes more and more relevant.
Horse before cart please
One would have thought that if HMRC was really interested in saving money the independent review - if such a thing is possible to achieve - should be undertaken beforfe the case is settled rather than following an appeal so that partisan or untenable views from HMRC don't give rise to appeals in the first place
Why not get it right first time?
As I have posted elsewhere, academic research in other areas where internal review is used suggests quite a significant rate of overturning which begs the question - why not spend the money devoted to internal review to getting it right the first time.
And if the dispute involves a genuine dispute over interpretation of a point of law then an independent tribunal is the obvious recourse.
There is also an issue about who appeals. Academic research in other areas of government suggests depressingly low rates of appeal or request for internal review even when critical issues (such as having somewhere to live) are at stake. The thrust of these proposals seems to be to cut down appeals. The taxpayers who are likely to fail to appeal or ask for a review will be those with no or poor representation - and who may be the ones who most need it. Harmonisation and improving processes should not be at the expense of procedural justice.
What exactly does it mean?
I think it's important to understand what is intended here. It's not just some sort of internal audit procedure or check. It will (or at least I assume it will from what's been said) be a formal procedure (as used in other government departments) which taxpayer requests effectively as first step in an attempt to redress a grievance of some kind (for want of a better description). As I say below, it would be better to focus resources on getting decisions right first time. It's also worth noting that in the Leggatt review of tribunals attention was drawn to the extent to which the then Inland Revenue controlled the procedure for listing appeals, giving rise to issues of lack of perceived independence of the Commissioners who were after all a genuinely independent body. I'm sure this has put people off making appeals over the years. How much more so will they be deterred from using an internal review process, no matter how independent the reviewer is from the original decision maker.
Canada has an internal appeals system at R&D
The system has been in place for many years. It acts as a deterent to reviewers from taking arbitrary positions outside of the law and against internal revenue policy. There are exceptions but most taxpayers only proceed to an internal appeal in situations where the facts, law and policy are clearly in their favour or where the amounts are significant. It is mandatory to go through the internal Appeal process before proceeding to court. It is my understanding that the majority of appeals filed are found in favour of the taxpayer.