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Dispute resolution for tax disputes - what to expect
Disputes over tax liability are one of the most frequent types of dispute. There are many causes of tax disputes, such as being charged too much or being refused a tax refund. A tax dispute can daunting, but being aware of the options there are for resolution can be extremely helpful. Obtaining legal advice is important for two reasons, first, you need to be sure of your position and secondly, you need to understand all the options open to you and the consequences of your choice.
In this piece, we outline different types of tax disputes, how you can appeal against a tax decision and how a tax dispute can be dealt with, as well as providing answers to frequently asked questions to help you fully understand this issue.
Read on to find out more:
Different types of tax disputes
As previously mentioned, tax disputes can take various different forms. For example, you may have been charged too much tax or you may be refused a tax refund. Also, you may discover that you have been refused tax relief that you are entitled to or perhaps that you have been subjected to double taxation.
How to appeal against a tax decision
If you believe that you have been subject to an incorrect decision relating to your tax; there are ways you can appeal.
If you have received a tax bill for too much tax or have been refused a tax refund, you will receive a letter from HMRC to let you know whether or not you may appeal. Normally, you will need to do this within thirty days.
When you submit your appeal, you will need to include documents and information to support your contention. Your appeal must include your name (or the name of your business), your tax reference number, a brief account as to why you are appealing, and what you think the correct amount of tax is, together with your reasons. Your appeal must be signed.
How can a tax dispute be dealt with?
If your appeal is rejected and you are still of the opinion that your tax position is incorrect, you can pursue alternative dispute resolution (ADR) to resolve the situation or as a last resort, you could resort to litigation.
If you decide to resolve the dispute with ADR, you can choose mediation, this will enable you to discuss the dispute directly with HMRC in the presence of a mediator. The mediator is a neutral presence who will oversee the situation and enable calm discussion allowing both parties to consider the facts of the situation. The mediator cannot provide legal advice during this process, their role is to guide the discussion and keep it under control. A mediator cannot provide a legally binding decision.
An alternative ADR option is arbitration, which is commonly used for financial disputes. The arbitrator will be qualified and can provide a legally binding decision. A court order may be required to ensure that the decision can be enforced.
The final option is litigation, where the matter will be subject to civil action before a judge in a court. It is strongly recommended that you attempt ADR before going to court to avoid both the costs and the length of time involved. In this case, the judge will hear the two sides of the argument presented through both parties' legal representation, after which the judge’s decision will be final.
How can getting legal advice help you in a tax dispute?
Giambrone & Partners expert tax and litigation lawyers are highly skilled and have years of experience related to tax disputes. We will be able to outline your rights and guide you through the steps required for each process. We will also advise on whether you have a valid claim and how to contact your tax authority.
Starting off with the correct legal advice will increase your chances of obtaining a successful outcome. Giambrone & Partners is experienced in both national and international tax disputes and can help you with either personal or business-related tax issues. If your tax issue is multi-jurisdictional, our team can provide expertise across a wide range of jurisdictions.
For help with a tax dispute, please click here to contact our litigation and dispute resolution team to get the right advice and support.
Frequently asked questions
What if you cannot pay your tax bill or you have a tax credits overpayment?
If you find yourself in this situation, you should contact HMRC as soon as possible in order to discuss your options.
How do you complain to HMRC?
In order to appeal to HMRC, a letter of complaint outlining your belief that there is an issue relating to your tax position and providing supporting documentation. You should ensure that the word “complaint” is written on the envelope.
When can alternative dispute resolution (ADR) be used?
Once your appeal to the HMRC has been rejected you can consider ADR.
Why is dispute resolution important?
Dispute resolution is important as it allows a dispute to be dealt with in a timely and cost-effective way rather than allowing the escalation of time and money.
What do lawyers do in civil cases?
A lawyer will discuss the issue with you and establish that there is a valid reason for your complaint. The supporting evidence must be provided and a case will be listed in the court. Your lawyer will speak on your behalf in the court, setting out your reasons in thinking that there is an issue relating to your tax position and cross-examining the witnesses from both sides.
What is the best option for alternative dispute resolution?
ADR provides more than one option including both arbitration and mediation. However, the best option in relation to tax disputes is mediation as there is greater flexibility.
How does the ADR process work?
The ADR process works by employing the assistance of a neutral third party to allow you to reach agreed terms and avoid litigation.
What does a tax dispute mean?
A tax dispute is when there is a disagreement between yourself and HMRC concerning the amount of tax it is suitable for you to pay or your entitlement to a tax rebate or the amount of tax payable based on your income.
How do you work out your tax?
Depending on the rate of tax your income indicates, you will need to subtract your eligible deductions from your gross taxable income and apply the percentage of tax applicable to the remaining amount, to provide your tax liability.
What if you cannot pay your tax bill?
If you cannot pay your tax bill, you will usually be able to avoid enforcement action if you contact HMRC as soon as you realise you will be unable to pay the bill.
What can you expect from alternative dispute resolution?
ADR will be carried out in a neutral environment where the facts will be laid out by both sides of the dispute. This will allow you to more clearly understand the position of the HMRC and their representative will also be able to calmly and clearly understand your point of view.