Tax Briefing: Justice Denied
In 2015, I wrote an article discussing the proposals to charge taxpayers a flat fee for accessing the Tax Tribunal system. I argued vehemently against this at the time on the basis that (amongst other things) the move from Commissioners to the current pseudo-Judicial system already created barriers to resolving disputes with HMRC.

Sadly that does appear to be the case and on 29th June, the Financial Secretary to the Treasury provided the following response to a question by Kelvin Hopkins MP asking how many court and tribunal cases are awaiting a hearing.

This data is not collated centrally, and an accurate answer could not be provided except at disproportionate cost.

The vast majority of HMRC cases are waiting to be heard before the First Tier Tribunal. At 31 March 2018, there were over 25,000 appeals on hand in the FTT. Over 16,000 of those appeals are ‘stood over’. This is where HMRC and the taxpayer have agreed to put the appeal on hold waiting for a decision in a related case. Stood over cases are not actively progressed by the tribunal and can remain on hand for many years while the lead case is decided.

There are approximately 9,000 lead cases actively making their way through the First Tier Tribunal where HMRC are either actively working the cases, progressing them within tribunal directions, or are waiting either to be heard by the tribunal or awaiting tribunal decisions to be issued.

If we take into account the fact that the latest FTT decision is numbered 06543, we haven’t even had 9,000 decisions since the FTT commenced in 2009/10 so I’d hazard a guess that the current crop would take a further 13 years to clear – clearly an untenable situation.  What is also clear is that the problems outlined above remain, however; certain other factors appear to now be exacerbating the problem.  I am one of a team of enquiry specialists and have witnessed a substantial decline in the number of experienced officers working cases in HMRC as the office closure plans picks up pace.  Many of these experienced officers have, amongst other reasons, chosen to retire or otherwise leave HMRC rather than face the prospect of a significant commute to the new regional centres

The consequence of this has been a noticeable intransigence in attitude from certain officers. This is understandable inasmuch as many of the technical arguments are referred upward to senior officers or to a central technical point away from their office. The natural consequences are:

  • The resultant opinion from the senior officers becomes “canon” as far as the caseworker is concerned with officers unable or unwilling to question the opinion provided by the senior officer.
  • Because we are dealing with inexperienced officers, both we and our clients are less able to have a peer to peer conversation to try and resolve matters.
  • Case workers appear to be ignoring representations from clients which don’t suit the worldview set out in their senior colleague’s opinion.
  • At best, cases are prolonged due to correspondence continually having to be referred upward.
  • Alternative Dispute Resolution (ADR) and HMRC Internal Review are becoming less effective means of resolving disputes.
  • There appears to be more of a move toward letting the tribunal sort it out.

Whilst all of these points are of concern to those who deal with HMRC enquiries, it is these last two points which are particular cause for concern, as the whole reason that ADR and Internal review were introduced was to provide a low-cost avenue for attempting to resolve cases without having to resort to litigation.

HMRC internal review is the point at which you and the officer have narrowed down the areas of dispute and need a third party to provide a technical view. They are worthwhile albeit it has to be remembered that the reviewing officer is still an employee of HMRC and still bound by the Litigation and Settlement Strategy – they are definitely not “honest brokers”. This being said, traditionally, you would receive a detailed response which, if the decision went against you, would at least give you a more informed view as to whether to take the matter to Tribunal.

Unfortunately, nowadays, the feedback we get from our clients and some of our own experiences indicate that the Internal review is becoming more and more a rubber stamping exercise, merely confirming the officer’s view without taking account of any technical representations made by the agent.

Likewise, ADR, which hitherto has been a useful forum for resolving disputes, is rapidly becoming a lip-service exercise. Despite the fact that there is no requirement on either side to come to an agreement at ADR, we have previously seen some surprising good results for clients arising at some of these meetings.

Our recent experience and that of our clients has been somewhat different, with Officers attending these meetings despite acknowledging publicly that they have no power to settle the case. In other cases, they have come in with an intransigent attitude at the outset refused to engage in the process. In one particular instance, the officer refused to discuss any of the technicalities of the case despite the stated aim of the meeting being to come to a better understanding of both sides’ position. In another case, an officer was sent to attend the ADR meeting without previously having had any involvement in the case.

So where does this leave us? – precisely where the Ministry of Justice statistics tell us – that the First Tier Tribunal is receiving an influx of cases because HMRC is not equipped to deal effectively with technical discussions and the only way forward is to let the tribunal sort it out.  In our view, a costly way to resolve matters which in many cases results in justice being denied.

A tax conference I attended in November 2016 involved a speaker from the Ministry of Justice who advised us that four new Tribunal Judges were in the process of being brought in to alleviate the burdens on the system. Whilst it was true that certain cases received a speedy hearing date, the more technical cases are taking up to 18 months to be heard  – longer if either party delays the process.

This new situation can only mean that either the Ministry of Justice takes on considerably more tribunal judges to deal with the increase in cases, or HMRC gets their house in order and starts giving agents access to the reviewing officers who are passing judgement from afar in metaphorical tablets of stone, to reduce the barriers to resolving cases.

It is hoped that once the new centralised districts are up and running and the office closure programme has ended, the newer officers will build up the relevant technical expertise to naturally overcome these barriers but realistically, with HMRC centralising its technical resources, this is appearing less likely.

If you would like to discuss the above subject further, please contact our Consultancy Team on 0844 728 0120 or by emailing

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Senior Tax Consultant
0844 728 0120

Neil is the Team Leader for the consultancy team, managing a multi-disciplinary team dealing with Full and Aspect CT and IT enquiries, all aspects of Employment Taxes enquiries including National Minimum wage and written technical consultancy as well as undertaking consultancy on his own portfolio of clients. Neil has worked in tax for 30 years, starting in Customs and Excise and transferring over to the Inland Revenue. He has also worked in various practices including Grant Thornton and PWC and currently specialises in technical enquiry work.

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