FOR Accountancy Firms and Tax Practitioners
Expert technical VAT consultants to support your teams with complex VAT matters.
We act as an extension to your existing team.
We provide extensive knowledge of UK and EU tax law to support challenges to HMRC.
HOW CAN our SERVICEs HELP YOU?
VATangles is offering the accountancy and tax practitioner community their specialist expertise in technical VAT matters, working alongside your team, where challenges to HMRC may be necessary, advisable or possible.
This provides access for your firm to our specialist skills, whilst retaining your own client relations. We can become a part of your team for the purposes of the matters in hand, without looking to take your client.
One of the most difficult matters for many VAT consultants – even those with years of experience – is to formally and successfully challenge HMRC’s view of matters.
Experience has shown that HMRC perceive their ‘policy’ to be determinative with regards to VAT and will actively discourage any challenge to it.
Nonetheless, our experience is that in many areas, where their ‘policy’ may be accepted by others as being the status quo and as correct and indeed the only way of considering matters, when in fact it is inconsistent with the law. Rarely is HMRC’s ‘policy’ more beneficial to taxpayers than that provided by the law, the result would be, by not challenging HMRC, that taxpayers lose out.
We offer the following services to support you and your team
Sometimes it may be perceived that HMRC’s interpretation of the law either runs entirely contrary to the wording of the statute, or alternatively does not take into account alternative interpretations suggested or demanded by case law. This may end up with a direct contest between HMRC’s ‘policy’ and the law. The Commissioners will always, in our experience, fight hard to protect the former, even where it is inconsistent with the law.
When this was looked at about a decade ago, it was found that almost 45% of assessments issued by HMRC were incorrect in at least one material particular. Sometimes these errors would be fatal to the assessment. We have seen no reason to suggest that HMRC’s accuracy has improved in any meaningful way. Yet if such assessments go unchallenged, they become payable and the taxpayers will lose out. Rarely, in our experience, do such assessments under-state a taxpayer’s liability. There is also an increasing occurrence of HMRC seeking to raise assessments outside the time-limits as set out in the legislation. Again, such a practice will always need to be challenged.
Outside of specific matters such as late registration, incorrect invoices etc., the current penalty regime was introduced to counter mistakes that HMRC would not have been necessarily expected to have found, and which were made carelessly or deliberately, but which did not provide ‘a reasonably arguable view of the situation’. What they were not introduced to do was to counter genuine challenges to HMRC’s ‘policy’, although officers will look to issue them in such cases. In the 2021 report Evaluation of HMRC’s implementation of powers, obligations and safeguards implemented since 2012, the draftsman reported: ‘Several external contributors felt that HMRC’s approach to penalties could be heavy-handed and in some cases HMRC are sometimes seen to use penalties too aggressively to discourage taxpayers from challenging HMRC’s views’. Yet nothing has changed. It
appears that HMRC are content to be aggressive with penalties. Consideration should always be given to challenging them.
The Appeals Process
The first step in challenging any decision, assessment or penalty issued by HMRC is to make a fully-argued case to the issuing officer as to why the document concerned is incorrect. Just occasionally they will change their mind, although in our experience this does not happen too regularly. The more likely outcome is a ‘decision letter’, upholding the previous decision, and giving time limits for any further challenge – either a Statutory Review within HMRC or a direct appeal to the First-tier Tribunal. The Statutory Review is a second-look within HMRC. Although the process should only be to see whether or not the document in question is consistent with the law, reviewing officers have told us that they are not entitled to find against HMRC’s ‘policy’. It is of limited use, but just occasionally will provide a solution. Either directly from the decision letter, or after the Statutory Review upholds HMRC’s document, the next stage is to appeal to the Tribunal. The first-tier Tribunal is the first stage of the statutory process. It determines the facts of the case, and makes a decision as to the law. This decision is not binding on any other Tribunal. Thereafter, an appeal can be made to the Upper Tribunal. This is the equivalent of the High Court. The decision of the Upper Tribunal is binding on all First-tier Tribunal cases. Further appeals may be possible to the Court of Appeal or even the Supreme Court.
It is possible for taxpayers to be represented otherwise than by Counsel in the first-tier Tribunal and even in the Upper Tribunal – although this is less usual. We appear regularly in the Tax Tribunals. However, increasingly in these Tribunals, and compulsorily in the Court of Appeal and Supreme Court, taxpayers are represented by members of the specialist tax bar, albeit that they are briefed by VAT consultants. We at VATangles work regularly with barristers of all seniorities – from the most junior to the top QCs working in the field. It is unusual that a working day goes by without some kind of communication with barristers. Our briefs are known for being full, and with compete legal arguments. This ultimately proves to be less costly to the Appellants. We have the respect of Counsel and their clerks at all levels.
Another option, in certain circumstances, is to use ADR. In this case, an HMRC trained mediator will liaise between your client and the case officer to endeavour to find a solution to the dispute. There are occasions where such an approach may be appropriate. However, as it is currently set up (and this may change) it is still HMRC looking to mediate disputes between taxpayers and one of their own! However, should the matter be suitable for ADR, we will represent the taxpayer in the discussions, and will ensure that the optimum case is presented to the mediator for his or her consideration. Undertaking ADR does not preclude your client at any time from appealing to the Tax Tribunal.
Here's our latest analysis and thought pieces impacting VAT accounting.
"VATangles is a trusted partner who has an in-depth knowledge of tax law and success at representing clients at Tribunals and in the Courts. Their expertise and advice on a recent case and other VAT matters over the last few years has been invaluable."
Gary Horne, Executive Vice Principal
Colchester Institute Corporation