Plans outlined in a Ministry of Justice consultation to introduce fees for taxpayers who challenge HMRC in the First-tier Tribunal and the Upper Tribunal have met with opposition by tax lawyers and accountants so far.
The proposals to introduce fees for taxpayers who take their cases to the First-tier or Upper Tribunal is part of a wider set of proposals to introduce and or increase charges for courts and tribunals. For the First-tier Tribunal an issue fee of £50 is proposed, and for standard and complex cases an issue fee of £200. Proposed fees for cases which go to full hearing are £200 for basic, £500 standard and £1,000 complex. For the Upper Tribunal a fee of £100 to seek permission to appeal is proposed and £2,000 for a substantive appeal hearing.
Law Society president Jonathan Smithers was particularly critical of the fee proposals, telling the Financial Times (27 August 2015) that ‘the government is effectively selling justice by saying that you need to pay for the courts’, adding: ‘To fight charges levied by one branch of government, you would have to pay another division of government … It leads to a feeling there’s a fairly heavy-handed state.’
Patrick Stevens, CIOT tax policy director, expressed the view that it was ‘only reasonable that HMRC should be as much at risk as the taxpayer on costs’, while Chas Roy-Chowdhury, head of taxation at ACCA, said that it wasn’t only wealthy taxpayers who would be affected, adding: ‘It is putting up a cost barrier for those who could have only made an arbitrary mistake.’
Elsewhere in the profession, Michael Avient, UHY Hacker Young personal tax partner, said that the fees should be opposed: ‘You’re now going to be charged to take an appeal [against HMRC] to court where you think you’re right … The costs may not initially be that great but, as we know, once introduced they are likely to rise.’
‘There is clear potential for taxpayers to be unfairly disadvantaged, and for the new system to produce inequities’, observed Nick Skerrett, partner at Simmons & Simmons. ‘The proposed rates are not dependant on the amount of tax, penalties or interest in dispute, and the consultation assumes small value disputes will fall into the paper or basic category. Statistics show that up to two thirds of tax tribunal users can be unrepresented. This population of users will clearly be sensitive to costs and potentially dissuaded from seeking access to justice.’
Amanda Brown, tax litigation partner at KPMG, agrees. ‘For the FTT, where costs are not generally payable, it is striking that HMRC is always the respondent and will never therefore pay these fees’, she said. ‘In some of the cases that have come before me, small operators have had a justifiable complaint with how HMRC has treated them and the tribunal represents a forum in which to do that and feel heard. Many of those taxpayers will be deprived of that forum with the introduction of charges.’
Plans outlined in a Ministry of Justice consultation to introduce fees for taxpayers who challenge HMRC in the First-tier Tribunal and the Upper Tribunal have met with opposition by tax lawyers and accountants so far.
The proposals to introduce fees for taxpayers who take their cases to the First-tier or Upper Tribunal is part of a wider set of proposals to introduce and or increase charges for courts and tribunals. For the First-tier Tribunal an issue fee of £50 is proposed, and for standard and complex cases an issue fee of £200. Proposed fees for cases which go to full hearing are £200 for basic, £500 standard and £1,000 complex. For the Upper Tribunal a fee of £100 to seek permission to appeal is proposed and £2,000 for a substantive appeal hearing.
Law Society president Jonathan Smithers was particularly critical of the fee proposals, telling the Financial Times (27 August 2015) that ‘the government is effectively selling justice by saying that you need to pay for the courts’, adding: ‘To fight charges levied by one branch of government, you would have to pay another division of government … It leads to a feeling there’s a fairly heavy-handed state.’
Patrick Stevens, CIOT tax policy director, expressed the view that it was ‘only reasonable that HMRC should be as much at risk as the taxpayer on costs’, while Chas Roy-Chowdhury, head of taxation at ACCA, said that it wasn’t only wealthy taxpayers who would be affected, adding: ‘It is putting up a cost barrier for those who could have only made an arbitrary mistake.’
Elsewhere in the profession, Michael Avient, UHY Hacker Young personal tax partner, said that the fees should be opposed: ‘You’re now going to be charged to take an appeal [against HMRC] to court where you think you’re right … The costs may not initially be that great but, as we know, once introduced they are likely to rise.’
‘There is clear potential for taxpayers to be unfairly disadvantaged, and for the new system to produce inequities’, observed Nick Skerrett, partner at Simmons & Simmons. ‘The proposed rates are not dependant on the amount of tax, penalties or interest in dispute, and the consultation assumes small value disputes will fall into the paper or basic category. Statistics show that up to two thirds of tax tribunal users can be unrepresented. This population of users will clearly be sensitive to costs and potentially dissuaded from seeking access to justice.’
Amanda Brown, tax litigation partner at KPMG, agrees. ‘For the FTT, where costs are not generally payable, it is striking that HMRC is always the respondent and will never therefore pay these fees’, she said. ‘In some of the cases that have come before me, small operators have had a justifiable complaint with how HMRC has treated them and the tribunal represents a forum in which to do that and feel heard. Many of those taxpayers will be deprived of that forum with the introduction of charges.’
