Tax Appeals Modernisation

The Judicial Appointments Commission has now launched competitions for Judges and Members of the new Tax Chamber. The competitions are running from 1st July to 21st July, with short-listing and interviews expected after the summer break. Information and application packs are available from the JAC website following this link www.judicialappointments.gov.uk.

We are pleased these competitions have now been launched, and we hope that a broad and diverse range of people will apply, including those currently dealing with tax appeals.

The Ministry of Justice has consulted on radical changes to the current tax appeals system in the UK. Reform of the current tax tribunals system has been proposed for some time. Sir Andrew Leggatt’s review “Tribunals for Users: One System, One Service” in 2001 highlighted the problems with the current system. The Government’s 2004 White Paper ”Transforming Public Services: Complaints, Redress and Tribunals” agreed that reform was required and the Tribunals, Courts and Enforcement Act which received Royal Ascent in July 2007 provides the Lord Chancellor with the necessary powers to enable the reforms.

The proposals are for a coherent and consistent tax appeals system capable of hearing the full range of direct and indirect tax cases. This unified system will be manifestly independent of Her Majesty’s Revenue and Customs and will provide an independent and expert hearing of tax appeals by tribunal panels flexibly constituted to meet the needs of the individual case.

The current Tax Appeals Tribunals

Taxpayers will encounter the Tax Appeals Tribunal when they disagree with a decision made by Her Majesty’s Revenue and Customs (HMRC) and decide they want their case heard by an independent tribunal.

There are currently four separate tax tribunals, the General Commissioners, Special Commissioners, VAT & Duties and Section 706 Tribunals. The General and Special Commissioners hear appeals against HMRC in relation to direct tax, the VAT and Duties in relation to indirect tax. The Section 706 Tribunal hears (infrequently) cases in relation to certain anti–avoidance provisions under the Income Tax Act.

The aim of tax appeals modernisation is the creation of a single, coherent, cost–effective and user–friendly tax appeals jurisdiction that meets the needs of all users. These range from the individuals to large multi–nationals, and matters that range from the relatively simple to the complex across both direct and indirect tax.

Under the current proposals, all current tax appeal rights will be heard by a unified tax chamber in the new two–tier tribunal system. (See Wider Tribunal Reforms).

Wider Tribunal Reforms

Tax Appeal Modernisation is being taken forward in the context of wider reforms of the system of tribunals that hear appeals against government decisions on which the MoJ is also consulting.

The proposals will create a new statutory framework for tribunals, with an overarching two tier system created by the TCE Act 2007. This new system consists of the ‘First–tier Tribunal’ and the ‘Upper Tribunal’. The Ministry expects that following consultation, the majority of existing tribunals will transfer into the new structure by the end of 2008. Within the new structures, chambers will group similar appeal rights together. A single tax chamber in the First–tier Tribunal and a Finance and Tax Chamber in the Upper Tribunal are proposed.

Tax appeals are not expected to transfer into the new system until April 2009.

The Tribunals Service’s reform programme is also seeking to modernise the administration of the tribunals. Plans for reforming the administration of tribunals are published in the Tribunal Service’s Strategic and Business Plan.

Changes in HMRC’s handling of tax Appeals: HMRC Consultation

HMRC have recently consulted on how they deal with objections to their decisions and, in particular, options for improving consistency in internal procedures for reviewing disputed decisions. Their proposals, taken with MoJs, set out how the wider end to end process of tax appeals will be reformed.

Objectives of Tax Appeals Modernisation Project in MoJ

The Tribunals Service reform seeks to ensure the accessible, informal and non–legalistic nature of General Commissioner’s decision–making is not lost in the new system. Non–legal members will have an important role in considering tax cases in the new jurisdiction.

Another aspect of the new Tax Chamber will be a single set of procedural rules with the flexibility for dealing with different kinds of cases.

Public Consultation

The Ministry of Justice has consulted the public and key stakeholders on implementation of the TCE Act 2007 based on the document outlining proposed changes "Transforming Tribunals", which includes a separate chapter on tax appeals.

In conjunction with reform in the Ministry of Justice, HMRC consulted separately on proposed changes to review processes within the department before an appeal is made. The Ministry of Justice is working closely with HMRC to ensure above all there is unfettered access to the new Tax Tribunal for all users.

Useful links:

Tribunals Review external link icon
The Leggatt Report was published March 2001 following an investigation into the Tribunals Service. The recommendations of Sir Andrew Leggatt were incorporated into the government White Paper 2004. This informed the Tribunals, Courts and Enforcement Act which passed Royal Assent in 2007.

The Tribunals, Courts and Enforcement Act of 2007 external link icon
The Tribunals, Courts and Enforcement Act of 2007 contains a wide range of provisions, including reform of the tribunal system.

The Ministry of Justice “Transforming Tribunals” external link icon
The Ministry of Justice “Transforming Tribunals” document sets out the government's plans for implementing part 1 of the Tribunals, Courts and Enforcement Act 2007. It explains how the tribunals system will be organised and supported.

The Ministry of Justice "Transforming Tribunals" Response external link icon
This is the Government’s Response to the Consultation Paper CP 30/07 Transforming Tribunal’s document – Implementing Part 1 of the Tribunals, Courts and Enforcement Act 2007 issued 22nd November 2007.

General Commissioner’s of Income Tax external link icon
General Commissioner’s of Income Tax website hosts previous Stakeholder Meeting Minutes and Papers presented for consideration by the Stakeholder Group for Tax Appeals Modernisation from March 2005 to March 2007.

HMRC “Tax Appeals against decisions made by HMRC” external link icon
HMRC “Tax Appeals against decisions made by HMRC” consultation document outlines proposals on modernising and streamlining the way HMRC processes and handles appeals against its decision.

HMRC Transforming Tribunals: Tax Appeals: Consultation on Costs Statement pdf download icon (16kb)
HMRC have provided for clarification a statement on their approach for costs in the New Tax Chamber. Currently the “Sheldon” policy is applied by HMRC in the VAT & Duties Tribunal, whereby they seek costs in only limited cases. HMRC do not intend to continue this policy in the new Tax Chamber.

Key dates for Tribunal Reform

Tax Appeals Modernisation Project Stakeholder Group

The Tax Appeals Modernisation Stakeholder Group has been set up by The Right Honourable Sir Robert Carnwath CVO, Senior President of Tribunals to feed in to, and make recommendations on, the work on tax appeal reform being undertaken by the Ministry of Justice. Sir Stephen Oliver QC, President of the VAT & Duties Tribunal, Presiding Special Commissioner, and Chairman of the Section 706/3 Tribunal chairs the group.

Members of the Stakeholder Group include representatives from HMRC, the Low Incomes Tax Reform Group, the Confederation of British Industry, the Clerks Association and General Commissioners, The Law Society, and the Institute of Chartered Accountants and other key groups.

List of Stakeholder Members pdf download icon (11kb)

These meetings have been held at intervals since 2005, and previous minutes and papers can be located on the General Commissioners website (listed above). Minutes and papers presented for discussion from September 2007 will be available on this website.

Minutes and Papers for recent Stakeholder Group Meetings

Stakeholder Group Meeting
2nd April 2008

Stakeholder Group Meeting
13th February 2008

Stakeholder Group Meeting
11th December 2007

Stakeholder Group Meeting
26th September 2007

Tax Appeals Modernisation Project Team

Karen Marsh
Project Manager
Tel: 0207 566 1338
Email: Karen.Marsh@tribunals.gsi.gov.uk

Bryan Pay
Policy Manager
Tel: 0207 566 1285
Email: Bryan.Pay@tribunals.gsi.gov.uk

Gemma Young
Policy Manager
Tel: 0207 566 1342
Email: Gemma.Young@tribunals.gsi.gov.uk

Last updated 17 April 2008