HMRC has released the figures for their reviews of – and appeals against – tax decisions from 1 April 2013 to 31 March 2014. These findings support the assertion that when it comes to challenging HMRC, the odds are stacked against you.
In a nutshell, HMRC provides the option of a review and/or appeal to an independent tax tribunal for any taxpayer who disagrees with a decision that HMRC made. The review system is open to anyone who has submitted their tax return through HMRC and is especially popular with people who don’t have an accountant or agent.
Most of the penalty reviews involve late filing and late payment penalties, which, as HMRC will attest, are often the direct fault of people filing their tax returns late. This is one of the risks of filing your tax return through HMRC, and one of the reasons why we advocate using a reputable agent.
As the above graph illustrates, HMRC is remarkably successful at upholding their decisions, especially in recent years. Take the 2013-2014 tax year for example, where they upheld over 50% of their original decisions (not accounting for those cases where a varied decision was made).
When it comes to appeals during 2013-14, the findings were even bleaker; around 75% of the decisions made by HMRC were in their favour, which was again much the same as in 2012-13.
Looking at this data, it’s clear that HMRC are overwhelming favourites when it comes to the reviews and appeals process. Although this is a much-appreciated service, what is particularly concerning is that the very reason why HMRC are so successful is that these discrepancies are largely due to taxpayers’ own (mis)calculations.
Claiming through an agency tends to result in the correct amount of tax being paid, simply because a good agency often specialises in tax and nothing else. What’s more, an agency will fight your battles on your behalf, keeping you up to date with any and all admin requirements. They will let you know what to expect, so that you can deal with any unforeseen situations accordingly.