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One in four chance of beating HMRC at tribunal

27th Feb 2015
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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?

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Replies (13)

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ghm
By TaxTeddy
28th Feb 2015 11:11

More stats please

It would be interesting to get an idea of whether the 1 in 4 figure is skewed by taxpayers representing themselves at tribunal in "hopeless" cases. Could the figures for properly argued  cases be nearer 50:50?

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By The hound
01st Mar 2015 13:01

Statistics
7081 appeals - 6626 were settled- 95% of appeals did not go to tribunal either revenue accepted the taxpayers appeal, there was a compromise or the taxpayer changed their mind and withdrew the appeal.
It would be interesting to know how many of these were settled with less tax being collected than originally sought.
It seems reasonable to assume that there was some benefit to the taxpayer to accept a settlement to their appeal.
Of the 7000 odd appeals the HMRC successfully argued 342 in front of the tribunal - not quite the 75% success rate implied

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By Anthony123
02nd Mar 2015 11:50

also what was the subject matter?

A lot of what the tribunal sees relates to penalties. Thinking for example about VAT surcharges the client may perceive the Tribunal to have more discretion than is actually the case.

The more interesting question is whether or not HMRC are winning cases where there are clear grounds for appeal.

It is also worth noting that because of the Donaldson decision few (any?) cases have yet been heard on self assessment late filing penalties post the new penalty regime.

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By charles.underwood
02nd Mar 2015 13:07

Lies, damned lies and statistics

I sit as a Tribunal Member and can tell you that you cannot draw any sensible conclusion from the HMRC figures.  Quite a lot of utterly hopeless appeals by unrepresented taxpayers come to hearing.  "Yes, I was late but I am usually on time, so please let me off".  My experience is that the taxpayer wins the majority of cases that are not utterly hopeless.

So do not be put off taking a case with some merit.  What I can be sure about is that you will get a fair hearing.

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Replying to DJKL:
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By Catti
02nd Mar 2015 14:10

Chance has nothing to do with it

Thank you charles.underwood for responding so appropriately to this piece of sloppy journalism.

The published figures simply report historical fact.

They have no bearing on the prospect of  success in a future case: that success should depend on the merits (or otherwise) of the appeal and the strength of the presentation of the case to the Tribunal.

I have seen nothing anywhere to suggest that the outcome of a Tribunal Hearing comes down to chance, and I do not believe that it does.

If the author believes that Tribunal hearings really are just a lottery with a 25% chance of winning, he should produce some real evidence of that.

I heard the other day that the national pass rate for the driving test was just over 47%. One of my nieces takes hers soon. She is an intelligent, confident and capable driver and has had hours and hours of practice. If this article is right, though, she still has less than 50% chance of success! 

 

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By NYB
02nd Mar 2015 16:25

I was involved only three weeks ago at a Tribunal. As a payroll provider I had made a "genuine mistake".  I took it all the way to tribunal. I am a sole payroll practitioner with an unblemished record over 20 years..Lett me say the whole process is not for the faint hearted. It is just like a court case with all the rules and regulations that go with it. HMRC referring to "bundles", the official Tribunal hearing where HMRC run roughshod over you, producing additional bundles which are not technically allowed. After my tribunal we wrote to complain  about the way it was handled and we were allowed to put our concerns in writing. HMRC were allowed to respond. Their response bore little resemblance to that tribunal!.

What is the percentage of people pulling out of the process because they cant get to grips with the legal side of it? I would have not have gone the full race if I hadn't have had my accountant husband backing me up, writing the letters etc. He was like my solicitor.

Oh - and if you are interested The Judge has gone away for two months to think on it as there were legal implications where HMRC had got in a muddle with what they were "charging" me for.

When its been decided - which I know will not go my way you can all have a look at it as it will be in the public domain. 

 

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By Jekyll and Hyde
03rd Mar 2015 09:02

I read this as......

.... If you have a good case you are likely to win, however if you don't then you are likely to lose.

Isn't this the real point of tribunal? 

If you have a really good case, it probably will not end up at tribunal at all.

 

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Replying to John Stone:
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By andrew.hyde
03rd Mar 2015 10:07

Absolutely correct

Jekyll and Hyde wrote:

If you have a really good case, it probably will not end up at tribunal at all.

My illustrious namesake is right.  HMRC like any large litigant has to filter cases.  If the taxpayer is likely to win, they don't (and shouldn't) waste public money taking it to tribunal.  So the sample of cases that get through to hearing is doubtless skewed in favour of HMRC slam-dunks, or cases where the taxpayer doesn't know or won't accept that his/her case is weak.  So the statistic is not really very surprising, or significant.

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By GuestXXX
17th Mar 2015 18:03

.

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By johnjenkins
04th Mar 2015 10:23

Great headline

Robert, which has created well informed comments.

Thank you for commenting Charles.Underwood. It really is good to get comments from people that I call "in the know".

When you have a great headline does it really matter about the content. Anyone can see it's an insurance promotion but don't we just bypass that because the meat is in the headline.

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By Nick E Morgan
21st Jun 2016 00:32

Another consideration is this; what if HMRC simply drops the cases they don't think they will win on the day of the hearing? This way HMRC keep a high scorecard and they have put the taxpayer through unfair stress and expense.

Nick
www.tax-hell.co.uk

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Replying to Nick E Morgan:
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By Bubbles63
19th Jul 2016 18:28

And are HMRC responsible for the money they spend on taking cases this far? I have been told by a former HMRC Fraud investigator it will cost between £150,00 to £450,000 to complete a prosecution that may only amount to a £2,000 loss,

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Replying to Nick E Morgan:
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By Bubbles63
19th Jul 2016 18:28

And are HMRC responsible for the money they spend on taking cases this far? I have been told by a former HMRC Fraud investigator it will cost between £150,00 to £450,000 to complete a prosecution that may only amount to a £2,000 loss,

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