Accountants whose clients disagree with a decision made by HMRC and want to appeal to an independent tax tribunal have a one in four chance of success, according to analysis by tax experts at Wolters Kluwer
Official figures show 7,081 appeals were received in 2013-14; of these 6,626 were settled. Of the remaining 455 appeals, three-quarters of decisions made by the tribunal were in HMRC’s favour.
Glyn Edwards, Wolters Kluwer’s UK CCH VAT expert, said: ‘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.
‘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.’
Edwards adds that if a 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.
It is also important to follow the appeal process, with the first step to use HRMC’s review team to resolve disputes before going to tribunal, and also to consider using HMRC’s Alternative Dispute Resolution Service, especially if a negotiated settlement is possible.
Meeting time limits for appealing and providing documents is critical.
Due to the complexity of cases, accountants should use qualified representatives wherever possible including barristers for complicated and high-value disputes, and ensure they are able to call witnesses who can testify the facts.
Additional advice is to request to see all of HMRC’s documents in advance, as the findings cannot always be anticipated. It is also important to provide documentary evidence, rather than simply assuming that everything said will be believed.
Wolters Kluwer is the publisher of Accountancy