In this section:
- What to do if you cannot pay the VAT due to HM Revenue & Customs
- Dealing with VAT when goods are returned
- Reclaiming VAT on bad debts on goods or services supplied by you
- How to correct mistakes and errors, and make adjustments
- VAT visits, investigations and prosecutions
- Appeals against decisions made on your VAT
- Penalties for mistakes and delays with your VAT
Appeals against decisions made on your VAT
If you disagree with a decision we make, you can ask us to reconsider the decision. Many disagreements are settled without having to go to a tribunal.
However, if the disagreement cannot be resolved, you have the right to appeal to an independent VAT and Duties Tribunal about certain VAT decisions.
On this page:
- Appeals
- Reasons for appeal
- Time limits for appeals
- How to appeal
- Documents
- Witness evidence
- What happens at the tribunal?
- More useful links
Appeals
If you disagree with a decision we make, you can ask to have the decision reconsidered. A large number of disagreements are settled by discussion or correspondence without having to go to a tribunal.
However, if the disagreement cannot be resolved, you have the right to appeal to a VAT and Duties Tribunal about certain VAT decisions. The chairmen, members and the tribunal staff are entirely independent of HM Revenue & Customs (HMRC).
The tribunals do not charge any fees for dealing with appeals. Legal aid is not normally available for appeals and so you would need to pay your own costs. However, legal aid may be available if your appeal is against a penalty for tax evasion. As a general rule, we do not seek to recover costs when an appeal is unsuccessful, although we do ask for costs in substantial or complex cases, or where we feel that the appellant has misused the tribunal process.
Reasons for appeal
These are most of the HMRC decisions relating to VAT that you can appeal against:
Category 1 appeals
Category 1 appeals are appeals against penalties for dishonest evasion of tax and any related VAT assessment. The Tribunals Centre can tell you about these appeals. You may wish to appoint a professional adviser for a Category 1 appeal.
Category 2 appeals
You can appeal against a default surcharge applied because you were late in making your return, or were late in making a payment, if you believe you have a reasonable excuse. However, the tribunal can only decide whether to allow or disallow the surcharge. It cannot reduce the amount of any surcharge that it decides was correctly applied.
You can appeal against a penalty for an error in a return caused by misdeclaration or neglect, or a penalty for late registration for VAT. In these instances, as well as being able to allow or disallow the penalty, the tribunal can also decide to reduce the penalty if it feels that it would be appropriate to do so.
You can also appeal for a reduction in a penalty for tax evasion, although if your appeal is against liability for the penalty - rather than just a reduction - the appeal is a Category 1 appeal.
Category 3 appeals
Category 3 appeals deal with all matters apart from reasonable excuses or penalties:
- an assessment to tax or the amount of an assessment
- the registration or cancellation of the registration of any taxable person
- a refusal to allow group registration or a change in a group registration
- a refusal to exempt a trader from registration or to allow voluntary registration as a taxable person
- the tax chargeable on a supply of goods or services, or on an importation of goods
- the amount of any input tax allowable
- the proportion of any supplies which may be taken as taxable supplies, for example, by a partially exempt trader
- the amount of a refund to a person constructing a new home
- a refund of tax in respect of a bad debt
- a refund of tax paid on an importation for private purposes of another person's goods
- a direction the value of supplies shall be their open market value
- a refusal to allow a retailer to use one of the special schemes
- a requirement in relation to invoices produced by a computer
- a requirement that a trader should provide security for any tax payable
- a direction that two or more taxable persons should be registered as one
- a refusal to repay tax on grounds of unjust enrichment
- a refusal to allow a taxable person to join the cash accounting scheme or the cancellation of cash accounting scheme facilities
Time limits for appeals
An appeal must normally be made within 30 days of the disputed decision.
However, we may extend this period in correspondence with you. You should tick box (iii) in Part B of the Notice of Appeal form to show that you wish to apply for an extension of time.
There are also a number of occasions during the early stages of an appeal where you or HMRC may be required to do something within a specific time limit, such as lodging a list of documents. The tribunal will consider requests for extensions to these time limits on their merits.
How to appeal
If your appeal is about disputed tax, a tribunal cannot normally hear your appeal unless you've already paid us the disputed amount of tax. However, the tribunal has the power to waive this requirement in certain circumstances, and we may also consent to waive this requirement.
If your appeal is about a penalty or surcharge, or an amount of interest, you don't have to make the payment before your appeal can be heard.
To appeal, you must complete a Notice of Appeal and deliver it to the Tribunal Centre for your area with a copy of the disputed decision - the addresses are on the form. You can send these documents by post or fax, or you can deliver them by hand. The tribunal will acknowledge receipt of these documents.
The Tribunal Centre will then send you a notice telling you the date, time and place of your hearing. You should get 14 days notice of the hearing. A tribunal is usually reluctant to postpone a hearing. If you do not attend the hearing, the tribunal can hear the case in your absence.
View a Notice of Appeal form from the Finance and Tax Tribunals website (PDF 65K)
Documents
The burden of proof is upon you, so you must ensure that you have any documents upon which you intend to rely with you at the hearing. This may include:
- invoices
- books of accounts
- bank statements
- contracts
- export documents
If you're in any doubt about whether to bring a particular document, it's best to bring it with you to be on the safe side. You can't assume that the hearing would be adjourned to give you time to produce documents.
In Category 3 appeals, each party must disclose to the other party all the documents they intend to rely on at the hearing. This must be done well in advance of the hearing. In Category 2 appeals, you don't need to disclose documents in advance, although it is helpful to the tribunal if you supply copies of the documents prior to the hearing. In both Category 2 and Category 1 appeals, it helps if you can take three copies of every document you'll be relying on to the tribunal.
If you wish, before the tribunal hearing you may contact us to discuss the case, and we may be able to work together to produce an agreed statement of facts, an agreed bundle of documents, agreed accounts, a summary of those matters not agreed, etc. This would simplify preparations for the hearing and save time and money. The tribunal finds agreed statements, etc helpful.
Witness evidence
If you need to use witness evidence in your appeal, it is usually down to you to arrange for the witness to attend the hearing. If the witness is reluctant to do this, the tribunal can issue a witness summons for you.
If your witness evidence is necessary but we aren't likely to dispute it, you can send a witness statement to the tribunal instead. This is a written statement which is signed and dated by the witness and is read out at the tribunal. However, if we object to the statement, you'll need the witness to turn up in person, otherwise his or her evidence can't be taken into account.
Equally, we may serve witness statements on you - if you don't accept what the witnesses say, you must object promptly, following the instructions the tribunal will send to you. If you don't object to the statements, the tribunal will read them and take account of what the witnesses say.
Please note, however, that we don't have to bring a witness to the hearing if you object to his or her statement - we can simply choose to do without the evidence. So if you want to ask that witness questions, you must ensure that we will be bringing him or her and, if not, issue and serve a witness summons.
What happens at the Tribunal?
Appeals are usually held in public.
Normally you will begin. You should introduce your case by explaining what it is about, giving a summary of the facts and how the law applies to those facts. You should also present the evidence that supports your case.
If you're not used to court proceedings, the chairman will help you with your case as far as he can. He can't argue your case for you, but he can ask our representative to explain the basis of their decision.
We will then open our case and present our evidence. You then have a right to reply, although you cannot usually introduce new issues at this point.
At the end of the hearing, the tribunal may give its decision there and then, or it may need time to reach a decision, which it will provide in writing later.
If the case exceeds the time allotted by the tribunal, it may need to be adjourned until a later date.
