Proposed tax tribunal fees could be a barrier to justice
Proposed tax tribunal fees could be a barrier to justice
Fri 08 Jan 2016
The Ministry of Justice (MoJ) has largely ignored the overwhelmingly negative responses to its consultation that included introducing, for the first time, fees for access to the tax tribunals. Objectors to the fees included individuals, professional bodies and the senior Judiciary but the MoJ has “considered all of the responses to the consultation very carefully” before going ahead anyway. This coincided with the Government backing down over court fees for criminal cases but tribunal users have not got off so lightly.
The only concession concerned appeals against fixed penalties of £100 or less, for which the cost of a tribunal appeal is now proposed to be £20 instead of £50.
The appeal process almost invariably derives from a taxpayer’s disagreement with an action taken by HMRC: so it is HMRC who initiate the process but it is the taxpayer (“customer”) whose only recourse may be to appeal and, now, pay two fees: (1) to lodge the appeal; and (2) for the hearing itself.
Of course the majority of appeals are settled by agreement without the need to take the appeal to Tribunal and taxpayers may request an internal review by HMRC before proceeding to a formal appeal but our experience is that these reviews rarely result in any change to the original decision.
But when it comes to the decision whether to take an appeal to tribunal the potential costs already have a deterrent effect and adding court fees merely adds weight to HMRC’s end of its ‘lever’ to force a taxpayer to ‘cooperate’. HMRC may point to the fact that successful applicants will have their fees returned but tribunal fees are double obstacle to accessing justice because they must be paid up front and they increase the potential cost, the odds if you like, of losing.
Court fees also affect alternative dispute resolution
An increasingly used means of avoiding the cost of a full hearing is alternative dispute resolution (ADR)- a kind of mediated settlement. ADR provides engagement with someone with both a better understanding of the law and a better appreciation of the factors that would be considered at a hearing who is also independent of HMRC. However, ADR only becomes available once the appeal has been lodged with the Tribunal, which will now require the payment of a fee.
Odds against the taxpayer
This means that even for a standard case the court fees will be £700: equivalent to tax at the basic rate on income of £3,500. So for many small cases, even before professional fees and costs of appearance are taken into account the offer to the taxpayer is likely to be much worse than “double or quits?”
Table of proposed charges as taken from the consultation response
| First-tier Tax Chamber | ||
Current | New | |
| Appeals against Fixed Tax Penalties of £100 or less | No Fee | £20 |
| Paper – Issue | No fee | £50 |
| Paper – Hearing | No fee | No fee |
| Basic – Issue | No fee | £50 |
| Basic – Hearing | No fee | £200 |
| Standard – Issue | No fee | £200 |
| Standard – Hearing | No fee | £500 |
| Complex – Issue | No fee | £200 |
| Complex – Hearing | No fee | £1,000 |
| Upper Tribunal Tax and Chancery | ||
| Permission to appeal – Issue | No fee | £100 |
| Permission to appeal – Hearing | No fee | £200 |
| Appeal – Issue | No fee | £100 |
| Appeal – Hearing | No fee | £2,000 |
Source: MoJ response to consultation
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