VAT Assessment Appeals

Rumour has it that now the Inland Revenue and HM Customs & Excise have merged (officially called HMRC) that the VAT tribunal was going to follow the example of the tax Special Commissioners and not pay costs even if the taxpayer won an appeal.

Idle Gossip
The VAT & Duties Tribunals will remain completely separate from the Special Commissioners, meaning that when you’re successful in an appeal, or if the VATman backs down before a hearing, you’re entitled to claim back all reasonable costs consequential to that appeal. However, there are a few things you should be weary of when handling the procedure.

VATmans Way
The VATman will advice you that, in the case of a disputed decision or assessment, a business should first write to its local VAT office and formally ask for a ‘local reconsideration’ of the assessment raised. If (and it’s a big if!) they agree with you, the VATman will withdraw the assessment.

The Other Way
Don’t take his advice, the problem been that even if your reconsideration is successful you won’t be able to claim back the costs.

Firstly, make sure that your professional adviser enters an appeal against to the VAT and Duties Tribunal using form Trib. 1. Now if the VATman backs down and withdraws the assessment before you get to the Tribunal or you are successful then all professional costs will be paid. Remember – If only a part of the assessment is wrong then only appeal against that part of the assessment. Only ask for the local reconsideration once the Trib. 1. has been submitted. If the VATman withdraws his assessment then you will need to withdraw your Tribunal Appeal and then claim back your professional costs back from the VATman. Your adviser can do this for you by writing a letter to the Customs Solicitors office with a detailed breakdown of the time costs; you should also include the time taken to make the costs claim. It will take about three to four months to get the cheque.

Haggle
The VATman will attempt to reduce the amount he pays you, if your adviser has worked 14 hours, the VATman might try and only pay for 9. If this is the case then the best solution is to return to the Tribunal, the expense of a costs hearing will be too much for the VATman and he should back down.