How to appeal a tax decision

Our team of experts tell you what you need to know if you disagree with a decision by HMRC

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

What happens if you disagree with a tax decision?

It can get really stressful if HMRC make a decision about your tax affairs and you think they’ve got it wrong. You can get advice about the HMRC decision if you don’t understand it, either from HMRC or a professional tax adviser. In some circumstances, you can appeal against HMRC’s decision – the letter you receive from HMRC will tell you if you are able to appeal their initial decision.

Some of the decisions you might be able to appeal against include:

  • If you have been issued a penalty by HMRC for paying your taxes late or not filing your tax return in time
  • If you have been denied a request for information or to check your business records
  • If you have been denied a claim for tax relief
  • If you believe your tax bill is incorrect (for example, your Self Assessment tax bill)
  • You may be able to ask HMRC to cancel any tax you owe if they haven’t acted on the information received from you, your employer or the Department of Work and Pensions (DWP) – this is in instances where you owe Income Tax, Capital Gains Tax or Class 4 National Insurance contributions

You don’t have to make the appeal yourself – it can be made by someone who deals with your taxes professionally, such as an accountant or a tax preparation specialist, like our experts at DSR Tax Claims.

You will usually be expected to pay your own appeal costs although you may be allowed to delay the payment of a penalty or any tax you owe until your appeal has been resolved.

How do you appeal against a tax decision?

When HMRC write to inform you of their initial decision, they will tell you if you have the right to appeal that decision. If so, they will include an appeal form with the decision letter and you should complete that form and send it to HMRC if you wish to appeal the decision. Alternately, you can write to HMRC to inform them of your wish to appeal. You need to include the following information:

  • Your name or business name
  • Your tax reference number (this will be on your decision letter)
  • Which part of the decision you disagree with and why
  • What you think the correct figures should be and the method you have used to calculate them
  • Your signature
  • Any extra information you may have that is relevant to your appeal or information that you think HMRC have missed in their initial considerations

If you don’t have a letter, you can write to the HMRC office related to your return (for example, the Self Assessment office or the National Insurance contributions office). You normally have 30 days to appeal an HMRC decision.

If you wish to appeal a decision against ‘indirect tax’ (this means taxes such as VAT, excise duty or customs duty), you can request a review by HMRC or appeal directly to the tax tribunal. Check out our handy guide to tax tribunals for more information on how to do this.

What happens next?

When you appeal, you can request that HMRC undertake a review of your case. This will be done by someone who wasn’t involved in the original decision and will usually take around 45 days. If it is likely to take considerably longer, HMRC will write to you to advise you of this. If you are appealing a decision about ‘indirect tax’, you can request that HMRC undertake a review of your case.

If you then disagree with the results of HMRC’s review, you then have two options – you can ask a tax tribunal to hear your appeal. You must do this within 30 days of the review decision. Alternately, you can consider alternative dispute resolution (ADR) which is a form of mediation.

How do you appeal against a penalty?

If your tax return is incorrect or late, you have failed to keep adequate business records, or you have paid your tax bill late, HMRC may issue you with a penalty. If you disagree with the penalty, you can appeal to HMRC. If you appeal, an officer who wasn’t originally involved in the decision to issue you with a penalty will review your case and if they believe that you have a reasonable reason to have taken the action you did, they may cancel or amend your penalty.

If you have received a penalty relating to ‘indirect tax’ (such as VAT, excise duty or customs duty) and you don’t think you should have been issued a penalty, you can either request HMRC to carry out a review of your case or you can appeal straight to the tax tribunal.

When HMRC issue a penalty, they send an appeal form with the decision letter and you can use that form to appeal against the decision. The letter will also give you additional details on how to appeal if you wish to do so.

If you are appealing against a penalty for Self Assessment, PAYE, VAT or Corporation Tax, there are also additional ways to appeal. These are as follows:

  • Self Assessment: before you can appeal, you must either have sent your tax return or informed HMRC that you no longer need to send a tax return. If you are appealing a Self Assessment penalty, you will need to tell HMRC the date the penalty was issued, the date you submitted your tax return and details of your reasonable excuse for late filing. If you have received a £100 penalty because you filed your 2016/16 tax return late, you can appeal online through your Government Gateway account. If the penalty relates to any other tax year, you will need to complete form SA370 or write to HMRC with details of your appeal. If the penalty applies to a business partnership, only the nominated partner can appeal and they need to use form SA371.
  • If you’re an employer appealing a PAYE decision: you can appeal online using HMRC’s ‘PAYE for employers’ service. Log in to the service and select ‘Appeal a penalty’. Once you have submitted the appeal, you will receive an immediate acknowledgement.
  • If you filed your VAT or Corporation Tax return late: if you had a reasonable excuse for filing your VAT return late, you can use form WT2 to appeal a penalty. Likewise, if you had a reasonable reason for filing your Corporation Tax return late, you can use form WT1 to appeal.
  • If you don’t have an appeal form: you can write to HMRC, including your name, your taxpayer reference number (for example, your UTR (Unique Taxpayer Reference) if you are registered for Self Assessment, or your VAT registration number, if your appeal relates to VAT), and a full explanation of why your return or payment was late and why you don’t think you should have been issued a penalty. If computer problems prevented you filing or paying on time, you should include details of the dates you tried to file or pay as well as details of any system error message. Make sure you sign your letter. Send it to the relevant HMRC office.

You must send your appeal within 30 days of the date of the penalty notice. If you miss this deadline, you can contact HMRC and explain the reasons for the delay in appealing and HMRC will then decide whether to consider your appeal.

If you then disagree with the outcome of HMRC’s review of your case, you can either ask the tax tribunal to hear your appeal (you must do this within 30 days of the review decision) or you can consider ADR (alternative dispute resolution), which is a form of mediation.

Can you delay payment while appealing?

Under certain circumstances, HMRC will allow you to defer payment of your tax bill while you are going through the appeals process. If your appeal is against a direct tax bill (such as Income Tax, Capital Gains Tax or Corporation Tax), you can write to HMRC to request that you can delay payment of your tax bill. You need to tell them why you think you have been asked to pay too much and what you think the correct amount is (and when you will pay that amount). HMRC will then write to you to tell you whether you can delay payment. If you are appealing against a penalty decision, you won’t have to pay until your appeal has been decided upon.

If you are appealing to HMRC against an indirect tax decision (for example, relating to your VAT bill), you don’t need to pay the bill until the review has been completed. If you are appealing directly to the tax tribunal, you will usually have to pay the tax bill before they will hear your case at the tax tribunal. However, if paying the bill will cause you extreme financial difficulties (if, for example, it will force you into bankruptcy or liquidation), you can ask to delay paying the bill until your appeal has been settled. Once the appeal has been settled, you will have to pay any money you owe, including any interest that has been incurred during the delay.

If your appeal relates to a penalty payment, you don’t have to pay that penalty to HMRC until a decision has been made and that is the same whether you have asked HMRC to review your case or you have appealed to a tax tribunal.

If you disagree with HMRC’s decision on letting you delay payment, you can ask for the decision to be reviewed.

What do HMRC class as ‘reasonable excuses’?

HMRC will allow you to appeal against some penalties if they feel you have a reasonable excuse for the delay in either sending your tax return or paying your tax bill. HMRC consider a reasonable excuse to be something that stopped you meeting your tax obligations, even though you had taken reasonable care to meet those obligations – this means that you must have tried to file on time or pay your tax on time, but a situation arose which got in the way of this. If HMRC believe you weren’t trying to meet your obligations in the first place, they won’t see you as having a reasonable excuse. HMRC considers the following as examples of reasonable excuses:

  • Your partner or a close relative died shortly before you were supposed to file your tax return or make your tax bill payment
  • You had to stay in hospital unexpectedly and that prevented you from dealing with your tax affairs
  • You had a serious or life-threatening illness
  • There were service issues with HMRC’s online services
  • You suffered from a failure of your computer or software just before or while you were preparing your online return
  • Your delays were related to a disability that you have
  • There were postal delays that you couldn’t have predicted
  • A fire, flood or theft prevented you from completing your tax return

However, HMRC expect you to send your return or payment as soon as possible after you have resolved the reason for the delay.

HMRC don’t consider the following to be reasonable excuses, so won’t allow you to appeal on these grounds:

  • You relied on someone else to file your return or pay your tax bill and they failed to do so
  • You made a mistake on your tax return
  • You didn’t get a reminder from HMRC
  • You were unable to use the HMRC online service because you found it too difficult or complex
  • Your cheque bounced, or your payment failed to go through because there were insufficient funds in your account

How can DSR Tax Claims help?

We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful.  Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

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