When HMRC doesn't play by the rules
When a taxpayer or HMRC asks the tax tribunal to settle a tax dispute both sides have to abide by the Tribunal Procedure rules.
This means, amongst other things, meeting the deadlines for delivering documents to the tribunal and respecting time limits set by the tribunal.
In a recent VAT case, Pacific Computers Ltd v HMRC, both sides were asked to provide their closing submissions in writing and requested a period of six weeks in which to do this.
The taxpayer provided its submissions on time and Judge Shipwright noted that they were helpful, to the point and of a sensible length. The HMRC team submitted closing submissions of 116 pages, much of which was not of assistance to the tribunal.
The HMRC team then attempted to make further submissions although the judge had said that as it was the taxpayer’s appeal the taxpayer should have the last word. After further argument a second 'final' submission was accepted and the taxpayer was invited to reply, which it did in eight pages.
At the end of this long case, which was heard over 10 days in early 2014, the tribunal found in favour of the taxpayer. But Judge Shipwright was not happy with the behaviour of the HMRC team throughout the case.
He said: "We remind HMRC the tribunal directions are there to be obeyed and not there for HMRC to decide whether it wishes to comply. For the sake of completeness we remind both parties the directions of the tribunal are there to be obeyed.”
But this is not an isolated instance of HMRC missing court deadlines. AccountingWEB reported recently that training group BPP is going to the Court of Appel to try and block HMRC from participating in a VAT tribunal after the tax department failed to supply full explanations of its decisions by the deadline set by the first tier tribunal judge.
In aother upper tribunal case, Leeds City Council v HMRC, the matter concerned an application for costs following a case whose decision was released on 3 December 2013. Such applications must normally be made within a month of the tribunal’s decision, and in this case by 3 January 2014.
Leeds City Council submitted its application by the required deadline, but HMRC’s application arrived six days late and without the required schedule of costs. Leeds objected, but the tribunal extended the deadline to allow the HMRC submission of costs.
If you are taking a case to the tax tribunal you should try to meet the deadline for submission of documents. If that appears to be impossible, seek an extension in advance from the tribunal. Also keep your submissions to a reasonable length and relevant to the facts of the case.
Rebecca Cave is the author of Tax Rates and Tables 2014/15 published by Bloomsbury Professional.