Enter Your E-mail

Penny Hamilton and Oliver Connolly considers some practical aspects to HMRC’s approach to the review process (for all taxes except restoration decisions under CEMA, s 152(b)).

 

Introduction

At the time of writing there is little or no information in the public domain as to how the review process actually works in practice. It is therefore useful to consider how HMRC intend the process to work and the best indication of this is in the internal guidance that they have issued to their officers and, in
particular, the Guided Learning Unit. (GLU). According to this guidance, the review must be carried out by an officer who has not previously been involved in the dispute. It is clear from HMRC’s internal guidance for review officers that the review is intended to be as independent as it possibly can be, given that it is being carried out within HMRC rather than by a third party:

‘Independence of review officers

The review must be a genuine second look at the case and it is important therefore that review officers are not linked to the decision makers (for example by being their line manager). This will benefit both customers and HMRC. Customers will benefit by being assured that review arrangements are fair and transparent. HMRC will benefit because we will only maintain decisions that have a sound legal basis and are in accordance with the HMRC Litigation and Settlement Strategy.

In order to help maintain a detached approach review officers should discuss cases with decision makers only as far as is needed to clarify a particular point or issue. Likewise the review officer should make sure they properly understand the customer’s position and offer equivalent telephone or face to face contact to the customer and agent, as necessary’ (GLU para 3.1.3).

In conducting the review HMRC are required by statute to ‘Have regard to steps taken before the beginning of the review –

(a) by HMRC in deciding the matter in question, and

(b) by any person in seeking to resolve disagreement about the matter in question’

and to

‘Take account of any representations made by the appellant at a stage which gives HMRC a reasonable opportunity to consider them’ (TMA, s 49E, VATA, s 83F(4)).

According to HMRC’s internal training package, the powers and duties of the review officer are as follows:

‘Principles of review

… Review officers will not have any additional powers to those available to decision makers but will be able to overturn decisions and vary them under the normal statutory rules. Although there is no legal obligation to write to customers during the review, review officers should ensure that they keep the customer informed of progress, have a clear understanding of the customer’s point of view and that they have requested any information needed to complete the review. Customers have a right to make representations to us and we must take those representations into account as long as they are made at a stage in the review period which gives us a reasonable opportunity to consider them.

Review officers have a key role in helping resolve disputes by providing a clear statement of the law and issues to help resolve a case.

A review officer’s role when reviewing a case is to make sure a decision

• has been properly made
• is legally correct (in HMRC’s view)
• is one which we would want to defend at tribunal in accordance with the Litigation and Settlement Strategy.

The nature and extent of the review will vary depending on

• how HMRC reached the initial decision, and
• steps taken to try to resolve the dispute.

For example, if before a decision was made, or (in direct tax) following an appeal, it was subject to extensive internal checking, perhaps including two or more layers of informal review separate from the decision maker, and/or requiring input from specialist technical advisers or counsel, the review officer is not expected to challenge the technical advice unless there is a reason to do so. They should instead confirm that all appropriate procedures were followed and that the decision reflects the approved process’ (GLU para 3.1.4).

The review officer is not to do the work of the decision maker. The GLU states:

‘The important principle to remember is that the role of the review officer is to review the basis of the decision made by the decision maker’ (GLU para 3.1.3)

and

‘It is not the review officer’s role to carry out case work as such but rather, to review the work that has already been done’ (GLU para 3.17).

The guidance envisages that the review officer can seek specialist advice within HMRC, subject to certain limitations:

‘If the caseworker has already sought advice the review officer should accept it unless they have particular reason not to. If this is the case, they must go back to the subject specialist and explain why they think the advice is wrong and seek further advice. If further advice is needed the customer should be asked to agree to an extension to the review time limit if appropriate’ (GLU para 3.1.6)

The taxpayer (or third party) has the opportunity to put his case to the officer who is conducting the review. It is envisaged that the review officer will have some contact with the taxpayer (or third party) which could be in writing, on the telephone, face to face or, subject to security considerations, electronically.

The GLU sets out the following guidance:

‘Contact with the customer

When a review officer is allocated a case for review they should tell the customer that they are going to review it and give contact details. Sometimes customers may want to contact the review officer to put their side of the case. HMRC is statutorily required to consider such representations.

Further representations or direct contact with the customer might give additional clarity about the facts of the case. And a meeting might also help to settle the case quickly because a face to face or telephone explanation may be more helpful to the customer than a written reply. However review officers should ensure that any contact does not amount to case working and that full written notes of all such telephone calls and meetings should be kept as potential evidence in any subsequent tribunal hearing.

Review officers need to handle unrepresented customers sensitively.

Sometimes they might not have been able to put over their point of view clearly in the review request, and review officers should try to get to the bottom of why the unrepresented taxpayer is not content with the decision.

This might, for example include asking the customer for clarification either by telephone or face to face’ (GLU para 3.1.9)

The above is adapted from Hamilton on Tax Appeals, published by Bloomsbury Professional. For further information about this book, visit: Hamilton on Tax Appeals