HMRC states that notice to appeal a tax decision or penalty must be made in writing by the taxpayer or agent to the HMRC office related to that particular tax return.
The appeal must include, in HMRC’s view, the following as stated in their guidance:-
1. the taxpayer’s name or business name, although this is common sense.
2. the tax reference number (found on the HMRC decision notice)- this is a practical detail.
3. what the disputed tax decision is and reasons why the taxpayer believes it is incorrect;
4. what the correct figure should be and how the taxpayer’s calculation was made;
5. the taxpayer’s signature.
What the Tax Legislation under S31A Taxes Management Act 1970 actually states that the notice of appeal must be given:
(a) in writing.
(b) within 30 days after the specified date.
(c) to the relevant officer of the Board.
Section S31 Taxes Management Act 1970 outlines the notice of appeal must specify the grounds of appeal. It does not mention what the correct figure should be or the other admin details necessary although that is commonsense to provide the name and reference relevant to the appeal. It does not even mention that the appeal has to be submitted to the relevant office.
It’s always best to check the tax legislation for accuracy rather than or in addition to HMRC’s guidance.
For those who claimed under the SEISS you will need to repay some or all of your grant if you:
➡ received more than HMRC said you were entitled to.
➡ your business was not adversely affected.
➡ you did not trade in the tax year 2019 to 2020.
➡ you did not intend to continue to trade in the tax year 2020 to 2021.
➡ you have incorporated your business since 5 April 2019.
Overpayments must be notified to HMRC within 90 days of receipt of an SEISS grant. If this has not been done and you have received a letter from HMRC then you have to quantify the overclaimed amount and look to the behaviour of the taxpayer :-
If you received an overpayment under the SEISS, the penalty will depend on whether you knowingly over claimed or not.
➡ If you knowingly applied and received a grant whilst being ineligible, the penalty will be based on the amount you were not entitled to receive along with other factors.
The HMRC guidance states: ‘If you knew you were not entitled to your grant and did not tell us in the notification period, the law treats your failure as deliberate and concealed. This means we can charge a penalty of up to 100% on the amount of the SEISS grant that you were not entitled to receive or keep.
➡ If you honestly believed you were eligible, and you later realised this was not the case, HMRC will only penalise you if you have not repaid the grant by 31 January 2022.
To repay an overclaimed SEISS grant you will need to log in to your Government Gateway account and fill out the relevant form with your grant claim reference and Self Assessment Unique Taxpayer Reference (UTR) number. Once you have filled this form out, HMRC will give you the details of where to repay the funds.
It’s interesting because we see the divergence in the tax approach of HMRC regarding meetings. VAT and PAYE officers open their compliance checks with an on-site visit and meetings, (but since covid19 has impacted their work this has not been possible). Also, you will not find the regimented approach to meetings as with corporation tax and self-assessment (direct tax)caseworkers.
In the #hmrc direct tax training, we had to complete interview training and was taught how to question the taxpayer. The meeting would follow a format and notes of the meeting would be detailed. With VAT caseworkers, sometimes you would not even find a proper note of the meeting, the standards of VAT caseworkers would differ one from the other. But VAT was seen as the more immediate and effective way to bring in the yield for tax especially with the approach to best judgement assessments.
In the earlier days, it may have been possible to do deals, especially where it was difficult to quantify the tax at stake and when local #tax offices existed. But that was soon knocked out of HMRC’s culture as I recall seeing a caseworker’s letter (when I was in HMRC) negotiating a settlement on the arbitrary basis of “Let us say £xxxxxx”. The HMRC Compliance Manager was not happy and one could almost see the steam coming out of her ears. Indeed the tribunal judge is not happy with that approach when HMRC cannot provide a reasonable principle on which the estimate was based on and has stated as in Cussens Tax Case (TC07337) that the figures were plucked from the air. In fact, the judge went one step further and stated that HMRC has issued the assessment almost in ‘terrorem’.
The #vat guidance states (VAEC1540) the strongest evidence will always be that which the business agrees with in principle. Where possible, an assessment based on more than one method will tend to be strong.
However, when approaching HMRC, I would never advise asking HMRC if we can do a deal. It's possible to negotiate a settlement as long as it is based on a reasonable principle that will stand up in tribunal.
HMRC caseworkers cannot apply for ADR. When the ADR application is accepted then it is compulsory for the HMRC caseworker to attend and normally the manager who has the authority to sign off the settlement decision will be present.
There have been cases where the HMRC caseworker demonstrates that their spirit is definitely not willing to participate which is against the whole idea behind ADR.
We can assure you that the ADR mediator will have had discussions with HMRC caseworkers about coming to the table with the willingness to listen and reach a resolution on the case. Unfortunately, you will come across the odd caseworker and manager who will be unreasonable suffering from Ivory Tower syndrome.
The ADR mediator does not have the power to make the tax decision, but at this time should be challenging HMRC as well as the taxpayer to reach a resolution. We have had a 92% success rate with reaching a resolution on a tax dispute with ADR. We should be using this service more.