One in four chance of beating HMRC at tribunal
Taxpayers have a one in four chance of successfully appealing an HMRC decision at tribunal, according to government figures.
In the tax year 2013-2014 HMRC received 7,081 appeals, of which 6,626 were settled.
Of the remaining 455 appeals, only 113 were successful.
Glyn Edwards, a VAT expert at Wolters Kluwer, said accountants should warn clients of the difficulty in appealing a Revenue decision.
“If you have a client that disagrees with an HMRC decision you need to make them aware of how difficult it is to win a case at tribunal,” Edwards said. “As the statistics show, only a few hundred appeals get to tribunal and those that do are more likely to be won by HMRC than the taxpayer”.
He added: “Clients shouldn’t be spending more time and money than the tax in dispute reserves, as they can’t claim costs even if they win in the first-tier tribunal. However, if an accountant feels the client has a strong case then it is certainly worth making an appeal, but only if the client has expert help, as those who represent themselves are more likely to lose.”
Wolters Kluwer has come up with some top tips for appealing to the tax tribunal, including:
- Use HRMC’s review team to resolve disputes before going to tribunal
- Consider using HMRC’s Alternative Dispute Resolution Service
- Research the legislation and any previous cases
- Request to see all of HMRC’s documents in advance
- Provide documentary evidence
- Call witnesses who can testify the facts
Wolters Kluwer offers fee protection (FP) insurance to customers but says it is able to settle the vast majority of disputes satisfactorily without needing an appeal hearing. It does not keep statistics of those it represents which don't reach tribunal. Of recent hearings Wolters Kluwer has been successful in 11 cases out of 18.
“We will support accountants with FP who want to represent a client themselves,” a Wolters Kluwer spokesperson told AccountingWEB. “This is quite rare as most accountants feel out of their depth - I think there is probably only about one case a year.”
On ‘reasonable excuse’ appeals Wolters Kluwer said HMRC has a strong strike rate. In one recent batch of decisions, HMRC had won nearly 90% of cases where the taxpayer was arguing that they had a reasonable excuse for late payment of a VAT return, the spokesperson said.
AccountingWEB members also commented on win/loss rates at tribunal.
Member BKD said: “Success rate at FTT is better than 50%. UTT considerably lower. Read into that what you will.”
While Les Howard added that HMRC says what it wants.
“They also withdraw some decisions that they cannot sustain at Tribunal, which makes a difference. Further, changes to Tribunal rules, and the costs are (not) awarded has affected the balance of cases being heard.
“You know the quote: lies, damn lies and statistics!”
What is your (or your clients') win/loss rate of going to tribunal against HMRC?