Why challenging the taxman is not appeal-ling...

12 January 2016

Andrew Hubbard

Last year we discussed the government’s proposal to introduce fees for taxpayers wishing to take an appeal to the tax tribunals. While taxpayers have to meet their own legal costs (and generally can’t recover them even if they win their appeal at the first tier tribunal) they aren’t currently required to pay anything to the tribunal service in order to have their appeal heard. A sliding scale of fees was proposed, from £50 for a simple case, through to £1,000 for the hearing of a complex appeal.

These proposals drew widespread criticism - including from ourselves. Our objections were about both the principle and the amounts. In a tax dispute a taxpayer will be appealing against a decision made by the state, and it seems fundamentally wrong that they should be required to make a payment in order to challenge a decision of the state. Our concerns about the amounts were directed mainly at appeals against fixed penalties. A taxpayer faced with a penalty of £100 would face a fee of £50 just to lodge the appeal and if there was a hearing to decide the appeal, then would pay a further £200 which wouldn’t be refunded if the penalty was cancelled.

The government has published its response to the consultation and hasn’t budged on the principle, meaning fees will be imposed for appeals once the necessary regulations have been authorised by parliament. There is however a small relaxation on the level of fees. A taxpayer appealing against a penalty of £100 or less will ‘only’ have to pay a £20 fee rather than the £50 originally proposed. But it does look as if there will still be a fee of £200 if the appeal goes to a hearing. We await further details.

The government cites the £8.7m annual costs of running the tax tribunal service for imposing these fees. It says ‘it is right that users of the courts and tribunal services should make a financial contribution towards the costs of these services’. This makes it sound as if taxpayers are somehow making a voluntary decision to ‘use’ the tribunal service just as they might decide to use a taxi rather than walk. It is worth repeating the reality. Taxpayers are ‘using’ the tribunal service because the state has made a tax decision with which they disagree. They shouldn’t have to pay to exercise their right to defend themselves against the state.

The government should think again.

If you would like to discuss this further, please contact Andrew Hubbard or your usual RSM contact.