The last in our current series of how to deal with what our transatlantic brothers refer to as a “tax audit” deals with the situation where you and the Tax Inspector just can’t agree.
Fortunately, our tax system doesn’t leave us completely to the mercy of the civil servants, but allows us a right of appeal against tax assessments or determinations.
Our impression is that appeals are much more frequent in the case of VAT disputes than income tax, capital gains tax, or corporation tax disputes, and there are a couple of important reasons for this.
One is that, although the Inland Revenue and Customs & Excise are meant to have merged into one organisation called HM Revenue & Customs, they keep the old traditions of the separate agencies, and one of these is that VAT people are much more “trigger happy” in terms of allowing things to go to the VAT Tribunal rather than attempting to resolve them in correspondence, which has traditionally been the Inland Revenue approach.
The second reason is that VAT lends itself to what you might term “low level” disputes more than direct tax does. A lot of VAT disputes that end up in the tribunal are about whether a particular item fits within zero rating or exemption on the one hand, or full vatability of the other, and it can be very much a case of nit picking about words.
How to Appeal
Although the structure of tax appeals is rather in the melting pot at the moment, at present the way it works, which is different between direct taxes and VAT, is as follows.
If you have received a VAT assessment, or a decision on the taxable status of a particular supply, that you disagree with"
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