Introduction

From April 2009, when taxpayers find themselves in dispute with HMRC, they will be able to ask HMRC to carry out an “internal review” of their case as a simpler and less costly alternative to appealing to the Tribunal.

But LITRG have warned that HMRC’s published ideas for the review are too complex and the process itself lacks the independence of an appeal directly to the Tribunal.

Support

We are generally supportive of the idea that HMRC should carefully review any decision of theirs against which a taxpayer appeals, before it goes to a full hearing. HMRC’s proposals take this concept one step further, by offering an ‘internal review’ as a preliminary, or an alternative, to an appeal if the taxpayer so wishes.

This is a constructive idea in itself. But for an internal review to be seen as a better alternative to an appeal, the process must be right. In particular:

• Taxpayers opting for internal review should still be able to appeal to the tribunal at any time.
• Options and rights should be clearly explained to the appellant at the outset, with HMRC playing a vital role in this particularly where the appellant is unrepresented.
• An internal review must distance itself as far as possible from internal influencing factors and should include external representatives on its panel or be subject to external audit.
• Timescales should be set and maintained to provide certainty for the appellant, and proper provision made for late appeals.
• A separately identifiable team should be responsible for review, allowing ease of monitoring costs, workload and benefits.

Summary

At present, the draft rules go only part of the way to fulfilling those requirements. Too much of the process is left to HMRC discretion, and too many of the detailed provisions are tilted in HMRC’s favour. We would like the rules to be less one-sided, and the process to be better prescribed so that taxpayers know where they stand.

Further Information

The draft rules are on HMRC’s website (http://www.hmrc.gov.uk/finance-bill2008/draft-tribunals-inquiries.pdf) together with an explanatory 'technical note' (http://www.hmrc.gov.uk/finance-bill2008/tn-draft-tribunals-inquiries.pdf).

To see LITRG’s full response:
http://www.litrg.org.uk/uploadedfiles/document/1_578_Tribunals_and_HMRC_Internal_Reviews(TechDoc)final280708.pdf

Article Added Friday, 05 September 2008 | 1298 Hits

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