MoJ advocates HMRC tribunal fees
Access to tax justice is set to become a less affordable for ordinary taxpayers if the Ministry of Justice (MoJ) gets its way and imposes fees for taking cases to the tax tribunals.
The MoJ is currently consulting on introducing fees for tribunals which don’t currently charge fees. These include the first tier and upper tier tax tribunals. This is part of a package of measures to recoup up to 26% of the operating costs of those tribunals.
The fees would have to be paid up-front by the appellant and are not related to the length of time the hearing may take or the amount of tax or penalty at stake.
For example, a case allocated to the basic category, the taxpayer would pay £50 to have the case registered, then another £200 for it to proceed to a hearing. Taking an appeal to the upper tribunal would cost £2,100 before any professional costs are incurred.
Up to two thirds of taxpayers who take a case to the first tier tribunal are not represented by an agent (per cases heard in 2013/14), perhaps because they can’t afford to pay a professional to help with the case. It is those cost-sensitive taxpayers who would be hardest hit by the new court fees, and may be dissuaded from attempting to argue their point of principle in front of the tribunal.
The MoJ consultation suggests there will be a scheme under which low-income taxpayers or those with limited capital will be able to have the court fees remitted. However, it is unclear how that would work in practice.
Nick Skerrett, head of contentious tax at Simmons & Simmons says it is not unreasonable to charge fees for taking a case to the tax tribunal but there should be a scaling of the court fees as applies in the High Court. For example, a lower level of fee should apply where small amounts of tax or penalties are disputed and higher fees where large sums of tax are at stake.
However Nick asks, “Is the tax tribunal the right forum to hear reasonable excuses for penalties imposed for late submitted returns or late paid tax?” Nick suggests there should be a truly independent panel which could hear the reasonable excuse appeals and avoid burdening the tribunal.
Currently the alternative dispute resolution (ADR) service is not truly independent of HMRC as the mediators are drawn from the ranks of HMRC staff. Also ADR can’t be used to sort out penalty issues.
At a time when the tax tribunals have a back-log of 29,566 cases waiting to be heard (as at December 2014), it is clear that system of tax hearings could benefit from reform. Nick Skerrett is clear that change is needed, and that should involve a rethink of how the whole range of tax disputes are dealt with, not just seeking to recover costs through court fees.