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How to challenge the Taxman - part 1 of 1 2

Published 01/04/2011

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Since 2009 over half of the 28,812 VAT penalties that have been issued by the taxman have been overturned. Find out how you could appeal.

Did you know over half of the VAT penalties issued by the Taxman since April 2009 have been overturned on review or appeal? HMRC's official records show that out of 28,812 reviewed as late or inaccurate, 16,270 penalties were issued incorrectly. If you receive a penalty for a late or incorrect VAT return, you should exercise your legal right to have that penalty reviewed.

You can also ask for most other penalties and demands that relate to other taxes to be reviewed. The review is carried out by an independent team within the Tax Office, that doesn't include the Tax Officer who imposed the penalty, or raised the tax demand. In fact most VAT penalties and penalties charged for submitting tax forms late, are imposed automatically by the Taxman's computer. In such cases the review will be the first chance a human has to look at the circumstances of the penalty and decide if it was imposed correctly.

How do you get a review?

The procedure for getting the tax, penalty or demand reviewed varies depending on whether the tax concerned is a so-called direct tax or an indirect tax. Most of the taxes you have to pay; income tax, capital gains tax, corporation tax, and national insurance contributions are direct taxes, but VAT and duties levied on 'sins' such as gaming, tobacco and alcohol are indirect taxes.

Indirect taxes

If the penalty relates to VAT or another indirect tax you will be offered a review with the letter that tells you about the penalty. If you don't agree with the penalty you need to either accept the offer of the review or submit a formal appeal against the penalty directly to the Tax Tribunal. The review, is the cheaper and easier option.

Whether you opt for a review or a formal appeal, you must act within 30 days of the date of the penalty notice. This is the date stamped on the penalty notice or letter. It is not unusual for a penalty notice to take up the three weeks to reach you through the post, so you may have less than 10 days to either accept the review or submit an appeal to the Tax Tribunal.

Once the Tax Office has completed the review you will have another chance to submit a formal appeal against the penalty, where the penalty has not been removed or reduced to your satisfaction.

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1st Published 01/04/2011
last update 09/12/2022 14:52:21

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