Ministry of Justice to introduce tax tribunal fees
Nobody wants to end up at a tax tribunal and certainly not a court to seek resolution to a dispute with HMRC. It is both costly in terms of time and cost and also stressful. When all else fails however that becomes the last resort. Up until now taxpayers have been able to take an appeal to the tax tribunals without having to pay for the privilege but that is all about to change.
In July 2015, the Ministry of Justice (MoJ) published a consultation document on the Government’s proposal to introduce fees to be paid by taxpayers wanting to have their appeals heard by either the First-tier or Upper Tribunal Tax Chambers. Ironically, the rationale for this proposal is that to be able to provide a properly funded service that protects access to justice whilst reducing the cost of courts and tribunals to the taxpayer, then the MoJ needs to revisit the fees they charge.
There was strong opposition to the proposal with common arguments that:
- the fees would restrict access to justice;
- the fees would negatively affect HMRC’s behaviour and decision making; and
- HMRC should pay the application fee, not the taxpayer.
It was proposed that a fee of £50 be levied to appeal a £100 fixed tax penalty which respondents pointed out was disproportionate. Thankfully, this was one point that the Government did relent on and agreed to downsize the fee to £20 for appeals against fixed penalty notices of £100 or less.

A number of respondents felt that certain cases should be exempt from the fees, such as:
- all cases apart from complex cases;
- appeals which involve a small sum;
- penalty cases; and
- fixed tax penalties of £100.
The consultation ended in September of last year and since then the Government has issued its responses and fee proposals for the tax tribunals which are now:
| First-tier Tax Chamber | Fee (£) |
|---|---|
| Appeals against Fixed Tax Penalties of £100 or less | 20 |
| Paper – Issue | 50 |
| Paper – Hearing | No fee |
| Basic – Issue | 50 |
| Basic – Hearing | 200 |
| Standard – Issue | 200 |
| Standard – Hearing | 500 |
| Complex – Issue | 200 |
| Complex – Hearing | 1,000 |
| Upper Tribunal Tax and Chancery | |
| Permission to appeal – Issue | 100 |
| Permission to appeal – Hearing | 200 |
| Appeal – Issue | 100 |
| Appeal – Hearing | 2,000 |
If a case is to be heard by the First-tier, the Tribunal must give a direction allocating the case to one of four categories:
Default paper cases
For simple appeals, such as late filing penalties. Appeals in this track will generally be dealt with by written submission although the parties can request a hearing.
Basic cases
These will generally be disposed of after a hearing with minimal exchange of documents before the hearing, such as penalties including VAT penalty mitigation and reasonable excuse appeals.
Standard cases
These cases will usually be subject to more detailed case management, e.g, a Statement of Case must be submitted by HMRC and will be disposed of after a hearing.
Complex cases
These are the more complicated cases, which are also subject to detailed case management, but the Tribunal can only allocate a case as ‘complex’ if it considers that the case:
- will require lengthy or complex evidence or a lengthy hearing;
- involves a complex or important principle or issue; or
- involves a large financial sum
Either party can appeal a First-tier Tribunal decision to the Upper Tribunal, but only on a point of law. The appeal is not an absolute right and parties must first seek leave to appeal from the First-tier Tribunal. If this leave has been refused, then the applicant can seek permission from the Upper Tribunal.
It is always better to seek to resolve tax disputes without resorting to the courts and it should be borne in mind that, for the majority of cases, HMRC don’t want to end up there either. Full use of HMRC’s statutory review procedure and Alternative Dispute Resolution (ADR) should therefore be taken advantage of before deciding whether to have an appeal heard by the tax tribunal.
Yet again the State (HMRC) who write the rules and then interpret same, having levied a penalty or disputed a tax return imposes costs on a person to prove his innocence! If a person loses an appeal then a charge might be levied depended on the circumstances e.g. a frivolous appeal with no chance of success. But where an appeal depends on interpretation of the law/regulation then the costs should be bourne by HMRC ( as they wrote the ‘poor’ rules in the first place!) I recently dealt with the Tax return and Estate of a person who deceased just after the beginning of the tax year. I submitted the full years Tax return in June and the Estate papers in July/August both of which were acknowledged. Subsequently in January I received a Penalty notice for the Annual Tax return. When telephoned they died receiving same and said their records showed no paperwork!.This was only rescinded when I could show them THEIR paperwork acknowledging receipt. Under the new rules I would have to pay £20 to prove HMRC’s incompetence – that is not just.Pursuit of the matter cost me time but I could not charge HMRC for my costs.
HMRC needs to be held account for their incompetence and if they charge to hear appeals then if HMRC lose they should reimburse the appellant for time and costs with an uplift. This would concentrate the minds of HMRC to get it right in the first place.
When does this come it effect. I am planning to take HMRC before a tribunal on a point of law which the continue to misinterpret despite case law in favor of the tax payer
Seems like more penalties for tax payers who receive very poor service from an inept HMRC.
I agree that if HMRC cause the problem they should pay the fee.