Appealing a case? You can do it!

Appearing before the Tax Tribunal is nothing to be scared of

– writes Russell Cockburn – just make sure you are well prepared.

I AM OCCASIONALLY asked to represent clients before the Tax Tribunal, or to assist other advisers with their clients’ appeal hearings. Whenever I mention this to my colleagues or other advisers they frequently comment that this is something they have never attempted and would be very wary about doing. They appear to believe that they would need a barrister to deal with it. This article is an attempt to illustrate that in fact this is something that most of us in the tax profession are probably very capable of doing and should not be approached with such temerity.

Certainly, appearing before the Tax Tribunal is an experience that I never forget. I always approach it with care and detailed preparation, but I have learned over the years that there is nothing to be frightened of and no reason why a carefully prepared adviser should not undertake it. Indeed, I firmly believe that taking a client’s case to a tribunal is something that is often discounted by advisers as being either too difficult or too costly for them and their clients.

I recently took a late appeal case to tribunal on behalf of a small limited company client whose corporation tax returns for two years had been filed very late with HMRC, resulting in pretty painful financial penalties being imposed. This was despite the company having explained in correspondence to HMRC that there had been a series of unfortunate events in the personal lives of key employees and directors of the company and also their tax adviser/ accountant who normally filed the company’s returns, which had resulted in the late filing. HMRC had proved unwilling to accept that these factors represented a “reasonable excuse”. The case hinged on persuading the tribunal Judge that there was indeed a reasonable excuse which they could accept dispute HMRC’s unwillingness.

Now it is important to recognise that Tax Tribunal hearings are conducted in a relatively informal manner these days, despite what many advisers seem to expect. There are rules and procedures to follow but in essence the judges need to hear arguments that are based on facts. Tax tribunals are essentially “judges of fact” and in cases such as this one they are mainly interested in being presented with the detailed facts and history of the case that have led up to the client ending up in the “mess” that resulted in the penalties being imposed.

Essentially, the argument was always going to come down to getting the judge to accept that when the company had not been able to deal with its affairs because certain key individuals were ill or unfortunately unavailable because of personal problems, the company could rely on the excuse that their adviser had also been unable to deal with their affairs because he was also simultaneously and unexpectedly seriously ill and could also not assist at crucial times. Historically, taxpayers have rarely been able to use the excuse of reliance on advisers as being “reasonable”, but in a small number of recent tribunal case judgements tax judges have indeed shown themselves somewhat more willing to accept such an argument an argument where it can be shown to be exceptional or unusual and unforeseen.

What is perhaps more important, however, is to stress that presenting such a case before the tribunal will always rely on careful and detailed preparation of the case and a willingness to present detailed evidence and facts to the Judges on which they can then rely in making their decision. The first step will have taken place prior to the hearing and this is the agreement with HRMC of the “bundle” of documents that are to be presented to the judges in evidence as part of the appellant’s case. This is usually straightforward and in a case such as this was simply the penalty notices and appeal letters, the tax returns, evidence of when they had actually been filed and the trail of correspondhmrctaxinvestigation. 7 ence between the clients, advisers and HMRC leading up to the appeal hearing.

After that, the most important stage is preparing the client who is going to appear as a “witness”. While this sounds rather traumatic, and usually the witness will be required to give their evidence on oath, normally in a case such as this it is a simple matter of asking them specific questions about the history of the case and getting them to express themselves simply and in a straightforward manner, telling the judge exactly what happened and why.

Once again, it is factual evidence, not opinions or judgemental comments that are important. It is therefore arguable that the most important stage, preparing the client for the presentation of their evidence and the likely cross-examination questions that may come from the HMRC representative, will have taken place prior to the actual appeal hearing itself. Preparation is everything here.

Most tribunal hearings are run according to a fairly standard procedure and running order by the clerk and the judges. This is done so that everyone participating knows from the outset what is to happen and in what order. However, it is important to be aware that this may not always happen and advisers should be prepared to step up and do a proper job representing their client. I have come across cases for example where the tribunal judge, or their clerk, may commence the proceedings by suggesting that the HMRC present their case first so that “everyone starts off on common ground”. While it is tempting to go along with this (after all no-one wants to seem too insistent on strict procedures if that is the way the Judge wishes to proceed), it is most important to recognise that the procedural rules laid down for the presentation of tax appeals by taxpayers are set out in a particular order for a particular reason. Specifically, these procedural rules have always had a built-in bias in favour of taxpayers and appellants. Perhaps a reasonable analogy here is to refer to the famous “conch” passage in William Golding’s novel Lord of The Flies.

The key passage describes a scene where the teenagers, marooned on a desert island, are sat around their campfire arguing. The strong character who wants to be the leader suggests that they all speak in turn according to who is holding the conch shell. He speaks first and then passes the shell round the circle, with each boy taking their turn to say what they think should be done. When the shell arrives back at the start of the circle he grabs it back and speaks again having realised that he who speaks first and last speaks loudest. The tribunal rules normally provide that the appellants speak first and last. This is deliberate and does indeed give the appellant’s adviser the opportunity to be the last person to address the judge, leaving them with their most important argument being the last thing they have heard. Giving up this opportunity is sacrificing one of the few advantages and adviser has when representing their client and so should be though through very carefully and if necessary insisted upon even if this seems rather “officious”.

Another feature of modern First Tier Tribunal hearings is that HMRC will often be represented by a member of their “advocacy team”, who is commonly a barrister. The first time this happened to me I was initially rather worried; after all, who am I to compete with the skills of a barrister presenting a case in court? However, I rapidly realised that this is less of a problem than I thought. It seemed to me that the barrister had only received the “brief” fairly recently and was not “invested” in the case in the way that I and my client were. Furthermore, we between us held in our heads by this time a pretty comprehensive and detailed understanding of all the facts of the case and were able to present our arguments and factual evidence in as thorough and comprehensive manner as could he. Facing a barrister should not be regarded as such a frightening experience as it might seem at first.

It is important to reiterate that preparation is all important when presenting a case before the tribunal. Having documents and facts arranged in an easily accessible order, cross referenced to relevant other documents and information where necessary is essential to the presentation. Being prepared to take things very slowly and deliberately so that the judge is given a very clear understanding of the key points is crucial.

Finally, there is usually one key aspect of any case which has to be emphasised over and over again. It may be a reference to specific event or letter or other document, but it will fundamental to success to get this across emphatically and to end the case by referring to it again right at the end so that this is the key factor which the judge is left considering.

Most of us do not appear before tribunals frequently. Indeed, some of us will do so only very occasionally. This is not to say that general practitioners cannot succeed so long as they have prepared themselves and their client well for the experience. My own view is that most of us can do so and do it well and we ought to be very willing to undertake this role unless the case is so technical or complex that it does demand the services of an experienced barrister.

In this particular case the judge adopted a compromise result and allowed the client’s appeal against one of the years but imposed it in the other. The client was satisfied with this result which saved them a considerable amount of financial pain. Such compromises are not all that uncommon at tribunals and whilst perhaps not entirely correct from a legal aspect HMRC will rarely appeal such decisions further in my experience.

• Russell Cockburn is a tax consultant, lecturer and author, and a former HMRC inspector. He can be contacted on 01909 824542 or by email at


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