In light of the amalgamation of the former Inland Revenue and HM Customs & Excise, it makes sense to bring together the appeals procedures so that there is a common system across the taxes. Unfortunately, that is where the good news ends. Click here to view the consultation document.

There are many proposed changes to the structure of the Tribunal service, but the most far reaching in the VAT field is the question of costs. Currently, if a taxpayer appeals a VAT assessment or ruling and is successful at Tribunal, he is entitled to claim back his or her costs. Only fair and reasonable you may think, as why should he be out of pocket when challenging an incorrect assessment by HMRC?

Unfortunately, this is not the case in the direct tax world, so, yes, you've guessed it; the consultation recommends that they do away with the provision of costs in VAT Tribunals.

In our experience, small businesses often get inaccurate assessments for relatively small sums (under £10K) and have appealed them on the understanding that they will get their costs back if successful. This will no longer be the case, and will surely result in many small businesses deciding that it is not cost effective to appeal, and simply paying the assessment.

It will, of course, also mean that the advisers of business will not be asked to handle the appeal either, given the additional irrecoverable fees that this would inevitably involve. Given the ineffectiveness of the
current reconsideration process, some businesses might try to defend the assessments themselves, with much reduced chances of success. So, in this brave, new world of spirit of fairness and equality for all, only large well-off businesses would actually have adequate recourse to the legal process!

Anyone wishing to respond to the consultation should do so through the link above, or, alternatively, they may wish to contact their MP directly.