At nigel gibbon & co we specialise in representing businesses in appeals to the Tax Chamber of the independent First- tier Tribunal ("FTT") against decisions of HMRC. We conduct hearings on behalf of our clients in most appeals but sometimes instruct tax counsel where it is likely that the dispute will carry on to the Upper Tribunal, the Court of Appeal or even (in one of our recent cases) to the Supreme Court.

Most HMRC decisions relating to VAT, Customs Duty or Excise Duties can be appealed initially by requiring HMRC to conduct a Review of its decision by an officer previously unconnected with the case. But if that is unsuccessful then an appeal to the FTT can be made. Examples of HMRC decisions which can be appealed to the Tribunal include:

  • Assessments for under-declared VAT;

  • Claims for repayment of overpaid VAT;

  • The VAT liability of specific supplies (ie. standard rated, zero rated or exempt);

  • Tariff classification and/or valuation of imported products;

  • Customs duty reliefs and preferences;

  • Liability to excise duties (eg. tobacco duty or duty on alcohol);

  • Seizure of goods at ports and airports.

HMRC operate a strict civil penalty regime for mistakes made by businesses in their VAT returns or where duty has not been paid on goods subject to excise duty, such as alcohol. Where HMRC accept that a mistake was not deliberate penalties range from 20-30% of the VAT or excise duty which has been underdeclared or underpaid. Where HMRC allege that the conduct of a business was deliberate then penalties start at 100% (but can be reduced if the business co-operates in HMRC's investigation).

Penalties for customs mistakes are slightly different. For non-deliberate mistakes penalties are fixed at £1000 or £2500 per mistake (depending on seriousness) but for deliberate errors penalties can also be as high as 100% of the unpaid duty.

Where a business has a reasonable excuse for a (non-deliberate) mistake the law provides that a business will not be liable to a penalty. Whether an excuse is reasonable or not is a question of interpretation and degree which will be decided by a Tribunal judge if HMRC do not agree.

We have represented many businesses in front of the FTT (and its predecessors, originally the VAT Tribunal and later the VAT & Duties Tribunal) over the years in all these sorts of cases and many more besides. Our clients have ranged from small businesses such as corner shop owners, publicans or restauranteurs to medium sized businesses such as sports equipment wholesalers, metal and alloy distributors or import agents to very large businesses such as invoice factoring companies, distributors of chemicals or multi-national biscuit manufacturers. We have also acted for a number of trade associations and charities.

Appeals to the VAT Tribunal were fairly informal in style as were, initially, those to the VAT & Duties Tribunal but procedural formalities have progressively taken hold and today the FTT is the first rung in the courts' system (akin to the County Court in general litigation) with a complex set of procedural rules which must be complied with. Once we might have recommended, in certain cases, that a business could represent itself before the Tribunal but we would not do so today.

Although we specialise in taking cases to appeal at the FTT, we also subscribe to the first rule of litigation – that it is better to settle a case, if at all possible, than to risk the uncertainties inherent in a court or Tribunal hearing. An appeal to the FTT should always be viewed as a last resort and no opportunity should be lost to engage HMRC in discussions with a view to reaching a settlement, remebering the maxim that a good agreement is one with which neither party is happy!