Watson Buckle Blog
Trying It On?
Appealing against a late filing penalty on VAT or other tax might be a smart move, given that more than half of such challenges so far have proved successful, according to recent statistics.
HM Revenue & Customs’ (HMRC) Internal Review Procedure, brought in on April 1 2009, has provided an easier method of querying tax appeal decisions and a growing number of firms are using the procedure.
According to HMRC’s own site, ‘the new review process will help provide a more consistent approach to the way we seek to resolve disputes with those who disagree with appealable tax decisions made by HMRC. Reviews … will be done by a trained review officer, who has not previously been involved with that decision, who will be able to offer a balanced and objective view.’
But is this ‘balanced and objective view’, which meant that almost sixty per cent of decisions were overturned between the inception of the Review and September last year, a good thing or a bad one?
If such a high percentage is overturned at Appeal, might it not mean that the penalties were issued wrongly in the first place? There has even been speculation that HMRC might be under pressure to issue as many fines as possible, or is, in common parlance, ‘trying it on’.
However, HMRC refutes this suggestion, saying that surcharges for late returns, which form the majority of penalty notices, are issued automatically and would generally be withdrawn or reduced if there was a good reason for their late filing.
A spokesman said that “the internal review process is there because we are listening to our customers”.
The statistics could also be viewed as a measure of the fairness of the review procedure. Whatever your point of view, it would appear that merely accepting a penalty is no longer the only option.
John Kinsella
Partner
