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HMRC internal manual

Self Assessment Claims Manual

How to Deal with Tax Adjustments that are not Claims?: What if the Customer Disagrees with your Conclusions - Other Cases

In non-SA cases if you cannot reach agreement with the customer, see ARTG2100 for guidance on the review and tribunal processes. In most cases you will not reach this point until you have had detailed communications with the customer and they are not persuaded to your point of view. There will be a few cases where it is clear from the outset that the customer does not agree, will not agree and may not co-operate with answering your queries. The customer may ask very early on for the matter to be put to an independent body.

Once you know that your case is unlikely to be settled by agreement, you should explain to the customer that you need to go through some formal procedures in order to give them an appeal right. The amount in question has to be in a self-assessment return in order for you to decide upon it formally in an enquiry. They can then appeal against your decision. Guidance on the review and tribunal process is in the Appeals, Reviews and Tribunals Guidance (ARTG).

You should send the customer leaflet HMRC1 on appeals with a covering letter explaining that you will

  • issue them with a return for the relevant year, which they will need to complete. However, they do not need to make their own self assessment (tax calculation) as we will always make the calculation for them in such cases (because the only purpose of the return is to generate an appeal right)
  • open a formal enquiry into their return and invite them to put to you their arguments about the point in dispute
  • close the enquiry with a closure notice containing your conclusions, making any amendments and giving them the right to appeal against your closure notice.

If the customer continues to want the matter heard by the tribunal after you have sent the leaflet on appeals, you should issue the return and follow the guidance given in the preceding paragraph.

The customer only needs to be within SA for the year into which you need to open an enquiry. You will need to contact the GCD and advise them to make the case SA for this year. The year should be cleared “SA” in COP function CS, but no link between the SA record and the COP record should be made (this avoids COP treating future years as “SA”).

Some customers may not want to go through the business of completing the return. You should not put any pressure on a customer to accept your conclusions but you should explain that the return is the only means of giving them a hearing in front of the tribunal.

In a recent appeal case about an exemption for work-related training (S200B ICTA (now sections 250 and 251 ITEPA 2003) ) the Special Commissioner accepted there was no right of appeal. He sent HMRC (the Inland Revenue at that time) away to go through the proper procedure in order to produce a “real” appeal before he would issue his final decision. See SpC332, Clementina Silva v Mike Charnock (HMIT).

If a customer does not want to proceed but remains unhappy you should explain the complaints procedure and give them Code of Practice 1, “Putting things right - How to complain.”

Once the customer has sent an appeal to HMRC, they may notify the appeal to the tribunal whether or not they accept the offer of a review. If the appeal is about your refusal to give effect to an adjustment that is not a claim and is not made in a return or an amendment to a return, you should explain to the Tribunal Service that you believe the tribunal has no jurisdiction.

The tribunal may still decide to hold a hearing, at which you should refer to Clementina Silva v Mike Charnock (HMIT) to demonstrate why you believe it has no jurisdiction in the matter.

You should always be fully prepared to argue the contentious point, in case the tribunal decides that it does have jurisdiction. In such a case you must contact the policy section responsible for the claim immediately after the tribunal gives its decision, as it may be necessary to take the matter further.

Different tax adjustments have different rules. If you have a query that is specific to a particular deduction or adjustment you should contact the policy adviser or technical adviser responsible for that area of work.