{"id":150436,"date":"2026-10-12T11:27:50","date_gmt":"2026-10-12T11:27:50","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=150436"},"modified":"2026-10-12T12:20:55","modified_gmt":"2026-10-12T12:20:55","slug":"united-kingdom-tax-disputes","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/united-kingdom-tax-disputes\/","title":{"rendered":"United Kingdom: Tax Disputes"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-150436","comparative_guide","type-comparative_guide","status-publish","hentry","guides-tax-disputes","jurisdictions-united-kingdom"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Baker McKenzie<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2021\/01\/baker-mckenzie.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Baker McKenzie<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2021\/01\/baker-mckenzie.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Tax Disputes laws and regulations applicable in United Kingdom<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it necessary for a taxpayer to register with the tax authority? Are separate registrations required for corporate income tax and value added tax\/sales tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is necessary to register with His Majesty&#8217;s Revenue and Customs (&#8220;HMRC&#8221;) if the taxpayer is within the charge to UK tax. Separate registrations or notifications are required for different taxes.<\/p>\n<p>Generally, a UK tax resident company must give notice to HMRC that it has come within the charge to corporation tax within three months of the beginning of its first accounting period, and within three months of any subsequent accounting period that does not immediately follow the end of a previous period (e.g., where the company ceases to be dormant). The first accounting period generally begins when the company starts to carry on a business. A non-UK incorporated company may be required to register for UK corporation tax, even where it is not required to register with Companies House. In such cases, the company must register for UK corporation tax within three months of becoming liable to UK corporation tax (which, for a UK-resident non-UK incorporated company, will generally be the date on which it became UK resident).<\/p>\n<p>A non-UK corporate taxpayer without a UK permanent establishment may need to register for UK income tax by 5 October following the end of the tax year in which liability to income tax arose.<\/p>\n<p>A taxpayer established in the UK must register for UK value added tax (&#8220;VAT&#8221;) if (i) their total taxable turnover for the last 12 months goes over \u00a390,000; or (ii) they expect their taxable turnover to go over \u00a390,000 in the next 30 days. Businesses established outside the UK must register for UK VAT if they make, or intend to make in the next 30 days, any taxable supplies in the UK. A taxpayer that does not meet the above criteria may be able to voluntarily register for VAT if they intend to make taxable supplies in order to recover VAT on costs.<\/p>\n<p>Where relevant, a taxpayer may also need to complete other registrations or notifications, for example, registering as an employer for the purposes of payroll taxes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In general terms, when a taxpayer files a tax return, does the tax authority check it and issue a tax assessment, or is there a self-assessment system where the taxpayer\u2019s own assessment stands unless the tax authority intervenes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The UK operates a self-assessment regime where taxpayers\u2019 self-assessments stand unless reviewed and challenged by HMRC.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a taxpayer amend their return after it has been filed? If so, are there any time limits for doing so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Taxpayers are generally able to make amendments to their corporation tax and income tax returns for up to 12 months from the due date.<\/p>\n<p>For VAT, taxpayers can submit a Notice of Error Correction to HMRC to amend their VAT returns for the preceding four years (the time limits running from different dates depending on the type of error being corrected). Taxpayers can also correct non-deliberate VAT errors for the preceding four years by correcting the errors in their VAT account and on their next VAT return, where the net value of errors is either \u00a310,000 or less, or between \u00a310,000 and \u00a350,000 but less than 1% of the total value of sales for the VAT return period in which the error was discovered.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please summarise the main methods by which a tax authority may challenge the amount of tax a taxpayer has paid by way of an initial assessment\/self-assessment. Does the tax authority need any justification to commence such a challenge?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For direct taxes, including corporation tax and income tax, HMRC may open a compliance check (or &#8220;enquiry&#8221;) into a taxpayer&#8217;s tax affairs within a set time period. For returns filed on time, this is typically 12 months from the date the return is received, although for corporate tax returns, where the taxpayer is a member of a group that is not &#8220;small&#8221;, the period runs for 12 months from the due date for filing. Separate time limits apply where a return is filed late. Following completion of an enquiry, HMRC will issue a &#8220;closure notice&#8221; to confirm either that there are no amendments to be made or to charge additional tax. If HMRC are out of time to open an enquiry, they may be able to issue a discovery assessment to charge additional tax or a discovery determination to reduce losses. In rare cases, HMRC may issue a jeopardy amendment during an enquiry where they consider there is a real risk of the loss of substantial amounts of tax (for example, a company about to go into liquidation). HMRC do not require a justification for opening an enquiry. However, HMRC must meet certain conditions to issue a discovery assessment or jeopardy amendment.<\/p>\n<p>For indirect taxes such as VAT, HMRC have the ability to issue an assessment where a return is missing or HMRC believe a return is incorrect, or VAT has been incorrectly repaid or credited. Any assessment must reflect HMRC&#8217;s best judgement of the VAT due.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the time limits for a tax authority to commence a challenge to the taxpayer\u2019s assessment\/self-assessment (disregarding any override of these limits to comply with obligations to provide relief from double taxation under a tax treaty)? Does a tax authority have any options to challenge a self-assessment after expiry of the relevant time limit?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For corporation tax and income tax, HMRC generally have one year following either the due date for filing or the date the return was received to open an enquiry.<\/p>\n<p>If HMRC fail to open an enquiry in time, they may issue discovery assessments or discovery determinations within four years following the end of the accounting period. However, this is extended to six years in cases of taxpayer carelessness, or twenty years if the taxpayer caused a deliberate error.<\/p>\n<p>Where there are offshore matters or offshore transfers, there is an extended time limit of 12 years following the end of the relevant tax period for HMRC to recover under-assessed or over-repaid income tax.<\/p>\n<p>For VAT, HMRC can assess within two years following the end of a VAT return period, or one year after evidence of new facts capped at four years. This time can be extended to twenty years if the taxpayer has made a deliberate error or failed in certain notification obligations, e.g., failure to notify of a VAT registration obligation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is tax fraud defined under the laws of your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no single definition of tax fraud as it is based on numerous statutes and developed through case law. HMRC summarise tax fraud as &#8220;any deliberate omission, concealment or misinterpretation of information, or the false or deceptive presentation of information or circumstances in order to gain a tax advantage.&#8221; Tax fraud covers a wide range of illegal activity, including but not limited to deliberately submitting false tax returns, falsely claiming repayments or reliefs, and hiding income, gains or wealth offshore. Enabling tax fraud is also illegal in the UK, which includes encouraging, assisting, or otherwise facilitating another person in carrying out offshore tax evasion or non-compliance with UK tax law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is tax fraud treated? Will the tax authority conduct a criminal investigation with a view to seeking prosecution and a custodial sentence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>HMRC&#8217;s starting point is to use civil powers to obtain information, collect unpaid tax and impose penalties. HMRC&#8217;s Fraud Investigation Service carries out civil investigations where taxpayers are suspected of deliberately underpaying tax. Where fraud is subsequently discovered or suspected, taxpayers may be given an opportunity to disclose fraudulent conduct in return for HMRC undertaking not to commence a criminal investigation. For cases where only criminal sanctions are appropriate, or where HMRC wish to send a strong deterrent message (e.g., cases involving organised crime), a criminal investigation with a view to prosecution will be conducted.<\/p>\n<p>In the UK, there is a robust framework relating to corporate and economic crime. The failure to prevent fraud offence came into force on 1 September 2025. Under this offence, an organisation may be criminally liable where an associated person, which includes an employee, commits one of a number of specified fraud offences (including the common law offence of &#8220;cheating the public revenue&#8221;) intending to benefit the organisation or its clients, and the organisation did not have reasonable fraud prevention procedures in place. This supplements the existing corporate criminal offence provisions, such as the offence of failure to prevent facilitation of UK and\/or foreign tax evasion.<\/p>\n<p>In addition, the scope for corporate criminal liability has recently been expanded. Liability can now be attributed to a body corporate or partnership where a senior manager, acting within their actual or apparent authority, commits any criminal offence (including tax offences). Notably, unlike certain existing \u201cfailure to prevent\u201d offences, the statute does not provide a defence in relation to having reasonable prevention procedures in place.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have to abide by any standards or a code of conduct when carrying out audits? Does the tax authority publish any details of how it conducts audits in practice?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>HMRC officers are expected to carry out their role in accordance with the Civil Service Code and the HMRC Charter.<\/p>\n<p>HMRC&#8217;s Enquiry Manual sets out HMRC&#8217;s approach to carrying out enquiries. Generally, case teams are expected to adopt a neutral approach and seek to engage openly and collaboratively with taxpayers. HMRC must comply with Code of Practice 8 when investigating avoidance, and Code of Practice 9 for more serious cases involving fraud or dishonesty.<\/p>\n<p>As a public authority, HMRC must not abuse their powers and taxpayers have recourse against overreach by way of judicial review. This includes, for example, the expectation set out in the HMRC Charter that HMRC will treat every taxpayer fairly.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have the power to compel the production of information? Does this extend to emails? Is there a right of appeal against the use of such a power?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>HMRC have statutory powers to request information. The information requested must be in the taxpayer&#8217;s power and possession, reasonably required for the purposes of the enquiry, and not legally privileged. This power extends to emails but does not include personal records and journalistic material.<\/p>\n<p>In practice, HMRC will generally specify whose emails they require, a date range, and a set of key terms to enable the taxpayer to complete a targeted search. They will normally agree to the exclusion or redaction of emails of a personal nature and anything that breaches GDPR obligations if shared.<\/p>\n<p>HMRC have the option of seeking approval on the content of an information request from a specialist tax court (the First-tier Tribunal (&#8220;FTT&#8221;)) prior to issuing an information request to a taxpayer, but are not required to do so.<\/p>\n<p>Taxpayers may appeal information requests to the FTT, unless the information requested comprises the taxpayer&#8217;s statutory records or HMRC obtained FTT approval prior to issuing the request.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have the power to compel the production of information from third parties? Is there a right of appeal against the use of such a power?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>HMRC have statutory powers to request information from third parties. However, HMRC must obtain the taxpayer&#8217;s consent or the FTT&#8217;s approval before issuing a third party notice. Further, the information requested must be in the third party&#8217;s power and possession, reasonably required for the enquiry, not legally privileged, and it must not be unduly onerous for the third party to comply with the request.<\/p>\n<p>Third parties may appeal the information request to the FTT on the grounds of onerousness, unless the information requested comprises the taxpayer&#8217;s statutory records or HMRC obtained FTT approval prior to issuing the notice.<\/p>\n<p>HMRC have a separate statutory power to obtain information from financial institutions, provided the information is not onerous to provide and it is reasonably required for the purposes of checking a person&#8217;s tax position or collecting a debt owed by a taxpayer.<br \/>\nFinancial institutions do not have a right of appeal against the information request itself.<\/p>\n<p>HMRC may also issue a bulk-data request to data-holders (known as &#8220;data-holder notices&#8221;). Unless HMRC obtained FTT approval to issue the request, data-holders may appeal the information request on the basis that it is unduly onerous to comply, they are not a &#8220;relevant data-holder&#8221; under the legislation, and\/or the data specified is not relevant data.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to settle an audit by way of a binding agreement, i.e. without litigation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is possible to settle an enquiry by agreement prior to litigation. The process for agreeing, documenting, and implementing such an agreement may vary based on several factors including whether there is an open enquiry or an appeal, and the nature of the tax at stake.<\/p>\n<p>For corporation tax and income tax, if HMRC have yet to issue a closure notice following an enquiry, any agreement can be reflected in the closure notice.<\/p>\n<p>If an assessment has been issued and appealed, a taxpayer may agree to settle with HMRC. For direct taxes, taxpayers may enter into a &#8220;section 54 agreement&#8221; pursuant to section 54 of the Taxes Management Act 1970; for VAT, taxpayers may enter into a &#8220;section 85 agreement&#8221; pursuant to section 85 of the Value Added Tax Act 1994.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If a taxpayer is concerned about how they are being treated, or the speed at which an audit is being conducted, do they have any remedies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If a taxpayer is concerned about how they are being treated, they have a right to complain. This can be done informally by speaking to the HMRC officer or case team they have been dealing with. Alternatively, where a formal complaint is necessary, taxpayers can submit a complaint to HMRC which will be subject to review. Taxpayers who disagree with the outcome of the review can escalate their complaint to the Adjudicator&#8217;s Office, and ultimately to the Parliamentary and Health Service Ombudsman through an MP.<\/p>\n<p>In certain circumstances, remedies may also be sought from the courts or tribunals. For example, taxpayers can ask the FTT to direct HMRC to close an enquiry.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If a taxpayer disagrees with a tax assessment, do they have a right of appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Where a taxpayer disagrees with a tax assessment, they have the right to appeal.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the right of appeal to an administrative body (independent or otherwise) or to a judicial body (i.e. a tribunal or court)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The method of appeal varies depending on the nature of tax at stake. For direct taxes, a taxpayer must first appeal an assessment to HMRC in writing. After this, the taxpayer may request, or HMRC may offer, a review by an independent HMRC officer, or the taxpayer may immediately notify their appeal to the FTT. If there is an independent review, the taxpayer must wait until the earlier of HMRC issuing its conclusion of the independent review, or the expiry of the 45-day review period (or any agreed extension to that review period) even if HMRC has not issued its conclusion by that point, before notifying the appeal to the FTT.<\/p>\n<p>For VAT cases, HMRC must offer an independent review at the time of issuing a decision to assess. The taxpayer has the option of accepting HMRC&#8217;s offer of independent review or appealing the decision\/assessment directly to the FTT.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the hearing in public? Is the decision published? What other information about the appeal can be accessed by a third party\/the public?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Appeals are not publicised until the hearing is listed on the cause list (i.e., a list of cases published by the FTT, Upper Tribunal or appellate courts with details of the parties, hearing venue and time). Once listed, third parties may apply to the tribunals or courts for copies of documents referenced in the hearing. The tribunals and courts normally provide parties to the appeal an opportunity to submit objections to such an application.<\/p>\n<p>Hearings are generally held in public. The tribunals may consider a private hearing is justified in limited circumstances if, for example, it would be in the interests of public order or national security, to maintain the confidentiality of sensitive information or to avoid serious harm to the public interest.<\/p>\n<p>Written decisions are normally published for substantive tax appeals; the FTT may choose not to publish some decisions if, for example, they relate to preliminary issues or are procedural in nature (e.g., decisions on closure notice applications).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the procedure mainly written or a combination of written and oral?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Some cases (e.g., procedural applications) may be considered by the FTT without a hearing, in which case submissions will all be made in writing.<\/p>\n<p>If there is a hearing, the FTT may direct that submissions be limited to oral arguments during the hearing without the necessity for parties to file written arguments beforehand. This tends to be limited to straightforward cases, such as procedural applications where the parties request a hearing.<\/p>\n<p>For substantive tax appeals, a combination of written and oral submissions are made to the FTT and\/or the Upper Tribunal.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a document discovery process?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For Standard and Complex cases, following HMRC&#8217;s statement of case, each party will be directed to provide the FTT and the other party with a list of documents on which it intends to rely. Each party must allow the other to inspect or take copies of all documents included in its list, other than those that are privileged.<\/p>\n<p>In addition, the FTT has the power to order disclosure of documents, whether upon request by a party or of its own initiative.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are witnesses called to give evidence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Witnesses are not mandatory, but parties must present facts to the FTT and this may require evidence from witnesses of fact. Evidence may also be given by experts on technical (non-legal) matters such as, for example, accounting concepts.<\/p>\n<p>As the FTT is the &#8220;fact-finding&#8221; tribunal, witnesses are normally only called at this initial stage of litigation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the burden of proof rest with the taxpayer on an appeal against an assessment?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The burden of proof is generally on the taxpayer. In other words, the taxpayer must be able to support their filed tax position.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How long does an appeal usually take to conclude?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>At the FTT level, it normally takes around one and a half to two years from notification of the appeal to publication of a written decision.<\/p>\n<p>The timeline is generally quicker for straightforward appeals or applications determined on paper.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the taxpayer have to pay the assessment pending the outcome of the appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally with direct tax cases, it is possible to postpone payment of the tax in dispute until the conclusion of an appeal, provided there are reasonable grounds for appeal. There are exceptions for which an upfront payment is required prior to appeal, such as Diverted Profits Tax which may be assessed in relation to accounting periods commencing prior to 1 January 2026.<\/p>\n<p>For VAT, taxpayers must pay the tax assessed before their appeal can be entertained. However, it is possible to make a hardship application to postpone payment. Alternatively, if an appeal is immediately stayed after being filed, it may be possible to argue that the appeal is not being &#8220;entertained&#8221; and there may be no obligation to pay the tax in dispute pending the stay being lifted.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on who may conduct or appear in the appeal on behalf of the taxpayer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The tax tribunal system is designed to enable laypersons to represent themselves in tax appeals. It is common practice for taxpayers to appear, or for their accountants or tax advisors to appear on their behalf.<\/p>\n<p>For complex cases, taxpayers generally instruct solicitors and barristers, and barristers will appear before the tribunals to make oral submissions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a cost-shifting system whereby the losing party pays the winning party\u2019s legal and professional costs of an appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>At the FTT level, parties will only be within the scope of the costs regime, which shifts the burden of paying costs onto the losing party, if the case is categorised as &#8220;complex&#8221; and the taxpayer does not opt out within a specified period of time.<\/p>\n<p>In the Upper Tribunal and higher courts, the general rule applies under which the losing party is liable for the winning party&#8217;s costs, normally assessed on a standard basis.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to use alternative forms of dispute resolution, such as voluntary mediation or binding arbitration? Are there any restrictions on when such alternative forms of dispute resolution may be pursued?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>HMRC encourage taxpayers to apply to use alternative dispute resolution (&#8220;ADR&#8221;) in certain circumstances, through the use of an HMRC-trained mediator. Taxpayers may apply for ADR at any stage of an enquiry or tribunal proceedings prior to a hearing. Each application is assessed on a case-by-case basis and ADR does not affect a taxpayer&#8217;s right to appeal. Multiple exclusions apply, notably certain disputes about HMRC delays, cases being investigated by HMRC&#8217;s criminal division and disputes about tax credits, among others.<\/p>\n<p>The Tribunal Rules also empower the FTT to bring to the attention of the parties the availability of any appropriate ADR and to facilitate the use of the procedure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a right of onward appeal? If so, what are the levels of onward appeal before the case reaches the highest appellate court?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Appeals following the FTT&#8217;s decisions are only allowed on questions of law and with permission.<\/p>\n<p>A losing party wishing to appeal must first apply for permission to appeal to the relevant tribunal or court that made the original decision under appeal. For example, the losing party must apply to the FTT for permission to appeal an FTT decision.<\/p>\n<p>Save for rare cases in which appeals are &#8220;leap-frogged&#8221;, the next step following the FTT is the Upper Tribunal, then the Court of Appeal.<br \/>\nThe highest appellate court is the Supreme Court.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the main penalties that can be applied when additional tax is charged? What are the minimum and maximum penalties?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Inaccuracy penalties are the common penalties that can be applied when additional tax is charged. These penalties may amount to 100% of the potential lost revenue (i.e., the difference between the tax self-assessed and the tax actually due, or losses overstated), and higher penalties can apply in certain offshore cases.<\/p>\n<p>The level of penalty charged generally depends on taxpayer culpability. An inaccuracy penalty can be reduced to nil if a taxpayer is able to demonstrate they took reasonable care in reaching their filing position.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If penalties can be mitigated, what factors are taken into account?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>With respect to inaccuracy penalties, the extent to which a penalty is mitigated depends on whether the taxpayer&#8217;s disclosure is &#8220;prompted&#8221; or &#8220;unprompted&#8221; and the quality of that disclosure.<\/p>\n<p>A disclosure is &#8220;unprompted&#8221; if it is made at a time when the taxpayer has no reason to believe that HMRC have discovered, or are about to discover, the inaccuracy. Otherwise, it is &#8220;prompted&#8221;. Whether a disclosure is prompted or unprompted determines the minimum penalty that may apply, with a lower minimum applying to unprompted disclosures.<\/p>\n<p>The quality of the disclosure then determines the reduction within the applicable penalty range. A maximum reduction of 100% can be given, and will be influenced by the level of &#8220;telling&#8221; (up to 30% reduction), &#8220;helping&#8221; (up to 40% reduction), and &#8220;giving access&#8221; (up to 30% reduction) that the taxpayer is seen to provide, assessed by reference to the timing, nature and extent of each of these factors.<\/p>\n<p>To qualify for a reduction for &#8220;telling&#8221;, a taxpayer must tell HMRC about the error.<\/p>\n<p>To qualify for a reduction for &#8220;helping&#8221;, a taxpayer must help quantify the amount of the inaccuracy or under-assessment.<\/p>\n<p>For &#8220;giving access&#8221;, a taxpayer must allow HMRC access to records for the purposes of ensuring that the inaccuracy or under-assessment is fully corrected.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Within your jurisdiction, what areas do you think are most likely to be subject to challenge over the next 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In relation to direct taxes, HMRC remain active in challenging transfer pricing arrangements. These enquiries tend to be complex and long-running, and although litigation in this area has historically been rare, we believe it may be more likely over the coming years. Further, HMRC continue to show a heightened interest in challenging intercompany loan relationships they perceive to be tax-motivated (i.e., loan relationships with an &#8220;unallowable purpose&#8221;).<\/p>\n<p>For VAT, HMRC are active in litigating across a wide range of issues and sectors. HMRC continue to be active in challenging VAT recovery in supply chains connected with VAT fraud.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your opinion, are there any areas that taxpayers are currently finding particularly difficult to deal with when faced with a challenge by the tax authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As there are no statutory time limits within which HMRC must close a corporation tax enquiry, it is not unusual for an enquiry to run for several years and stretch back to accounting periods ending more than a decade ago. In these cases, it is challenging for taxpayers to gather and present contemporaneous evidence to support their filed position whether by way of documents or producing witness evidence. This issue is exacerbated by the slow cadence at which HMRC conduct enquiries, the substantial caseload and resource constraints affecting the tribunals, and the length of time it can take for appeals to progress through the courts. While HMRC are currently making substantial investments in AI, it remains to be seen whether this will benefit taxpayers in terms of increasing the pace of enquiries and, ultimately, resolution.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4389<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/150436","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=150436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}