Alternative ways to challenge HMRC

Decisions and assessments

In almost any situation where HMRC issues an assessment or makes a decision about your or your business’s tax which you don’t agree with, you have the right to ask for a formal review . The starting point differs depending on whether the tax is direct, e.g. income tax, or indirect, e.g. VAT. We’ll focus on direct tax now.

Tip. Before you can ask for a review you must appeal against HMRC’s assessment etc. Usually your appeal must reach HMRC no later than 30 days from the date the assessment etc. is issued.

Timing your request

The right time to ask for a formal review depends on the circumstances in which HMRC has issued the assessment etc. For example, if you have reached an impasse in a tax enquiry and HMRC issues a closure notice, you can appeal against the notice and ask for a formal review at the same time. In contrast, if an assessment arrives out of the blue the first thing to do is appeal (assuming you disagree with the assessment) and only ask for a review if your disagreement can’t be resolved.

Tip. HMRC has 30 days in which to respond to your request for a review. If it won’t agree to one you must either continue trying to persuade it that its assessment or decision is wrong through normal channels or ask the Tribunal to settle the matter. HMRC can offer you a formal review even if you don’t ask for one. You have 30 days to accept the offer.

The review

From the date a formal review is accepted HMRC has 45 days in which to carry it out and notify you of its outcome. The review is usually undertaken by someone other than the person you’ve been dealing with.

Tip. HMRC can ask for more time to complete the review. It’s good practice to agree as long as the extra time is not unreasonably long. Human nature being what it is, co-operating might help your case whereas being unco-operative usually won’t.

Success rate

The bad news is that formal reviews only go the taxpayer’s way about a third of the time. This isn’t unexpected considering it’s HMRC that makes them. In our experience, a review varies between mere lip service on the part of HMRC to a genuine attempt to address the issues.

The big question - to review or not?

If your appeal is going nowhere your options are limited: you can accept HMRC’s position, or continue to argue indefinitely until HMRC refers an appeal to a Tribunal to decide or you do the same. Continuing to argue your case directly or at the Tribunal costs time and effort (and if you ask your accountant or a lawyer to represent you, a lot of money too). So, even though the odds aren’t in your favour asking HMRC for a formal review where you’re deadlocked is a no-brainer. Even if the review fails you can still take your appeal to the Tribunal.