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.
PENALTIES
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.
REASONABLE EXCUSE
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.
APPEALS
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!