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Changes to VAT appeals

From 1 April 2009, the process for handling VAT disputes is changing.

The existing system involving local reconsiderations, followed by appeals to the VAT and Duties Tribunals, will be abolished and replaced by a new structure. This is to co-ordinate and streamline the appeals procedure for all disciplines affecting HMRC.

The local reconsideration of disputed decisions will be replaced by the internal review. Most importantly this will be optional; that is, the appellant can either request the review or proceed straight to the new Tribunal system.

If the findings of the internal review are not to the appellant’s satisfaction, a further appeal to the Tribunal is still available. The internal review will be carried out by a specially trained officer who has no connection with the officer who made the disputed decision or his/her line management, and a decision must be given within 45 days (unless another period is agreed between the parties).

The new Tribunal will be structured on a two-tier basis. Most appeals will now be heard by a single Tax Chamber in the first-tier Tribunal but adverse decisions of that Tribunal will be appealable to the second-tier Upper Tribunal.

The relevant section of the Upper Tribunal for VAT disputes will be known as the Finance and Tax Chamber. A small number of the most complex appeals will be heard initially by the Upper Tribunal, and the most straightforward of cases will be decided without the need for attendance at a hearing; that is, they will be decided through correspondence.

Although the new system streamlines dispute-handling within HMRC, there must be some doubt as to whether it will reduce the number of appeals proceeding to a Tribunal hearing unnecessarily.