Andrew Needham looks at the time limits a taxpayer has to comply with when making a VAT appeal to the tax tribunal.
If a business has a dispute with HMRC and it cannot be resolved through the internal review process or the alternative dispute resolution process, it has the right to appeal to the independent tribunal. In the first instance, the appeal is made to the First-tier Tribunal of the Tax Chamber.
Historically, the tribunal has taken a fairly lenient view of the statutory time limits, but over the past few years they have tightened up considerably, and taxpayers will need to be aware of the time limits and make sure they stick to them.
Entering an appeal
Entering an appeal to the tribunal within the 30-day time limit may seem simple, but it requires careful consideration before going down that path.
Even if the taxpayer is successful, they are unlikely to have their costs paid, so the taxpayer will need to weigh the costs of taking an appeal to the tribunal against the tax at stake. Even if the taxpayer has a good case, it may not be worth challenging it, as the professional fees might outweigh the tax. Other factors to take into account are the time taken to obtain professional advice on the technical issues and submitting the appeal form (T240) with the grounds for appeal.
The 30-day time limit is, therefore, actually quite tight. The 30 days run from the date of HMRC’s decision or, if a review has been requested, the time limit is extended to 30 days after HMRC has completed its review.
Keep to the time limits – or else!
The tribunal is taking an increasingly harsh view of allowing appeals to be entered outside the 30 day time limits. They have recently ruled that a delay of 2-3 days is acceptable but that a delay of 3 weeks is unreasonable and would only be allowed in exceptional circumstances.
When deciding to extend the time limits, the tribunal will consider a number of issues. As a general rule, the tribunal will consider the following points:
- What is the purpose of the time limit?
- How long was the delay?
- Is there a good explanation for the delay?
- What will be the consequences for the parties of an extension of time?
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What will be the consequences for the parties of a refusal to extend the time?
After entering an appeal
The Tribunal Service will acknowledge an appeal and forward a copy to HMRC, who then has 30 days within which to submit a Statement of Case in response, which justifies the original decision.
HMRC hardly ever meets that time limit because of their workload. Usually, it will submit several requests for an extension of time.
In theory, a list of documents must be provided to the other side within 30 days of the Tribunal Centre acknowledging the appeal. Both sides often ignore this time limit, the problem being that the parties are not able to identify all the documentation in question until much nearer the hearing. However, the taxpayer must make sure that they supply copies of documentary evidence (e.g., contracts, brochures, etc.,) to HMRC before the hearing. Otherwise, they are entitled to ask for an adjournment, with the taxpayer paying the costs of the extra time.
If the taxpayer loses at the First-tier Tribunal, they can appeal to the Upper Tribunal, but the request for a further appeal must be entered within 56 days.
Practical tip
If a business is going to appeal a VAT decision of HMRC’s to the tribunal, it will need to be aware of the time limits and stick to them, particularly entering the appeal within 30 days of the disputed decision.
