How to challenge the taxman
Since 2009, tens of thousands of penalties that have been issued by the taxman have been overturned. Find out how you could appeal.
Did you know over half of the VAT penalties issued by the taxman since April 2009 have been overturned on review or appeal?
HMRC's official records show that out of 28,812 reviewed as late or inaccurate, 16,270 penalties were issued incorrectly. If you receive a penalty for a late or incorrect VAT return, you should exercise your legal right to have that penalty reviewed.
You can also ask for most other penalties and demands that relate to other taxes to be reviewed. The review is carried out by an independent team within the tax office that doesn't include the tax officer who imposed the penalty or raised the tax demand.
In fact, most VAT penalties and penalties charged for submitting tax forms late are imposed automatically by the taxman's computer. In such cases the review will be the first chance a human has to look at the circumstances of the penalty and decide if it was imposed correctly.
How do you get a review?
The procedure for getting the tax, penalty or demand reviewed varies depending on whether the tax concerned is a 'direct' tax or an 'indirect' tax.
Most of the taxes you have to pay - income tax, capital gains tax, corporation tax, and national insurance contributions - are direct taxes. VAT, and duties levied on 'sins' such as gaming, tobacco and alcohol, are indirect taxes.
Where the disputed penalty or demand relates to a direct tax, you need to submit an appeal directly to the tax office. Where tax is deemed to be due you will also need to ask for collection of that tax to be postponed while your appeal is considered.
You must ensure that you submit the appeal and postponement application within 30 days of the date of the penalty notice or tax demand. Because of this, you may need to act very quickly if the taxman's letter or notice has been delayed in the post.
When the taxman considers your appeal he may reduce the amount demanded, perhaps to nil. If you are happy with this, you need take no further action. If you are not happy you can ask for a review. Once the review has been completed you have another opportunity to submit a formal appeal against the penalty or tax demand to the Tax Tribunal.
If the penalty relates to VAT or another indirect tax you will be offered a review with the letter that tells you about the penalty. If you don't agree with the penalty you can either accept the offer of a review or submit a formal appeal against the penalty directly to the Tax Tribunal.
The review is the cheaper and easier option. While there are no charges for making an appeal to the tribunal, you will be required to cover the cost of any representatives you choose to call upon, such as an accountant or solicitor.
Whether you opt for a review or a formal appeal, you must act within 30 days of the date of the penalty notice. This is the date stamped on the penalty notice or letter. It is not unusual for a penalty notice to take up to three weeks to reach you through the post, so you may have less than 10 days to either accept the review or submit an appeal to the Tax Tribunal.
Once the tax office has completed the review you will have another chance to submit a formal appeal against the penalty if it has not been removed or reduced to your satisfaction.
Child and working tax credits - can you claim?
What to send in with your appeal or review acceptance
If you had a reasonable excuse for submitting the tax form late (or whatever the cause of the penalty was), explain those circumstances on the review acceptance form, or in a letter with your appeal. You can include evidence to support your position. For example if you relied on advice from the VAT National helpline, send in your record of that advice.
How long does the review take?
The tax office review should take about 45 days, but the review team may ask for longer if the matter is complex. It is in your interest to give the review team as long as they need. If they are time-pressured they may be more likely to uphold the original amount of the penalty or tax demand.
When the review is complete you should receive a conclusion of review letter. If you are not happy with the conclusion, you have 30 days from the date of that letter to submit a formal appeal to the Tax Tribunal. If you do nothing within that 30-day period, the review conclusion will stand.
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I dont know about the late payment fee, if you missed that you may end up liable, if the money owed was properly calculated.
If anyone has any doubts, telephone the Parliamentary Ombudsmans office for advice, but a full complaint to them can only be referred by your MP's office after having completed each stage of the 3 tier system through the Inland Revenue.
You can get advice from 'Tax Aid' -
Advice is available over the telephone by calling 0845 120 3779. Calls can be made from 10am to 12noon, Monday to Thursday.
Yes the claim is based on the information supplied. BUT the advisors on the phone OFTEN (in my case) gave conflicting information.
I was able to prove this by getting hold of the Tax Intelligence recordings of all my calls. They still fought tooth and nail all the way to the Ombudsman and they still tried to collect their wrongly calculated money.
You see a claim is based on two lots of info, what you supply, which is in reply to what they request, if their requests are not consistent you have a case.
I do not see how they can demand payment when a case is on appeal, since it may well be that they have wrongly claimed it.
just dont forget that tax credits claims and child benefit based claims are based upon the information given to HMRC by the individual. its not HMRC advisors making up the information and putting it on the system on your behalf, its the indivual who provides them with the information. If your form is correct you will have no issues..
Dont pay it moonwatcher. Forget the commercial crap above. This is what you do-
There are three tiers of assessment in the Inland Revenue, you must complain to the first tier who sent you the demand and claim it is wrong. If you have made any phone calls and have been given wrong advice you can request a copy of your phone calls from their intelligence section which keeps recordings of ALL phone calls to the Inland Revenue. Try and find dates for these calls on itemised bills. You can request replacement bills from your phone provider if you have chucked these. The call copy will arrive on a cd, which gives you plenty of opportunity to expose inaccurate advice - if there is any it is a great tool for beating them!
Specify on your letter that it is an official complaint under their complaints monitoring procedure.
When you fail to resolve this, ask for the address of the second tier complaints team, and take your complaint to them, and likewise to the third tier team. They will all reject your claim, but don't lose heart, they usually do this regardless. They will try to contact you by phone to discuss this, but they wont give their full names - tell them you refuse to discuss personal financial matters over the phone with someone who will not give their name and get them to put it in writing if the want to talk.
The next step, which you can ONLY do after taking the above steps, is to go to the financial services ombudsman. You send copies of ALL letters between you and the Inland revenue, and in particular, records of phone calls (which they are notoriously bad at giving inaccurate info on).
Throughout this process you MUST keep copies of all papers, yours and theirs. Expect your case to run for 2 - 4 years, and remember any demands they might make during that period must be countered immediately by telling them your case is on appeal. They cant require any payments until your case is resolved.
The Ombudsman will get a reply from them and copy it to you, you must point out what you disagree with, and at all time keep your claim accurate and to the point.
I won back nearly £5000 tax credits, got £250 compensation from them and an apology for the time taken along with another £50 for my inconvenience.
Don't give in to the bloodsuckers, they don't tell you there are three tiers in the Inland Revenue, or help you in any way, they are bastards imho! They will try really hard to confuse you by bombarding you with mail, sometimes two a day. Don't lose your cool, just file them in date order so you can show they are harassing you.
Last point, do NOT raise your voice or swear during phone calls, if you have, don't do it again, you may need to use a specific call to demonstrate inaccurate info.
Good luck my friend.
Please note that articles on MSN Money do not constitute regulated financial advice, which recommends a course of action based upon the specifics of your personal circumstances. The articles are intended to provide general personal financial information. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances. You can search for an IFA in your local area. Any statement regarding financial services products and tax liability is based on legislation and tax practices as at 6 April 2011, which is, of course, subject to change. The value of any tax benefits or reliefs depends upon the individual circumstances of the investor. When investment performance is mentioned you should remember that past performance is no guarantee of future performance. Where products have an underlying investment content, in many cases the value of the investment can fall as well as rise. For with-profit based investments, there is no guarantee as to the level of bonuses that will be declared, if any. Where mortgages or secured loans are explained do remember that your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it. All mortgages are subject to underwriting, status and are not available to people under the age of 18.
A new study suggests a typical financial emergency costs around £1,200 - would you be able to raise that kind of money within a month?
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- Yes - from my savings
- Yes - I could put it on credit
- Yes - I could borrow from family or friends
- No - raising that kind of money in a month would be impossible