VAT Reviews by HMRC
HMRC can take up to 45 days to review the decision of one of its own officers.
HMRC instruct one colleague to scrutinise another’s work, under the auspices that the officer is “independent and unconnected with the case”. We have witnessed the notion that such familiarity does not contaminate pure judgement in a case where both decision maker and reviewer shared the same office. The complaints procedure follows a similar incestuous route.
Conduct of the Review
HMRC has published its guidance to its Review officers (ATACPD02700, and the ARTG series including: ARTG4080, ARTG1030). The law on VAT Reviews is contained in an amendment to the VAT Act 1994 (Section 83F).
A Review officer must be independent and comply with HMRC’s Quality Assurance process to make sure that the reviews:
- are consistent
- are carried out to the required standard
- provide feedback to review officers and to business areas so that guidance and training for decision makers is improved.
- are time-limited and customers have the right to make representations to the review officer to make sure that their point of view is understood, see ARTG4220 and ARTG4230.
- their aim is to provide an additional opportunity to resolve the dispute without the need for a tribunal hearing.
The Law Value Added Tax Act 1994 Section 83F inserted by S.I. 2009/56 article 3 and Schedule 1 para 220 from 1 April 2009.
HMRC must give, notice of the conclusions of the review and their reasoning within a period of 45 days beginning with the relevant date, or
Where HMRC are required to undertake a review but do not give notice of the conclusions within the time period specified in subsection (6), the review is to be treated as having concluded that the decision is upheld. If this applies, HMRC must notify the trader or the other person of the conclusion which the review is treated as having reached.
HMRC’s Recent Review Performance
During 2013 HMRC’s review system failed to conclude several iPhone cases where no notification was received from HMRC, the only alternative was to appeal to the Tribunal. 8 months or more were lost on additional costs and further time wasting to get an appeal lodged.
Confirmation of these failings was published in the Joint Customs Consultative Committee minutes, (HMRC Senior Management) on 30 September 2014:
Review and Appeals Team – Decisions Upheld Without Review (Barbara Scott)
BS introduced her paper and gave a brief overview on the issue encountered on cases referred to the Review and Appeals Team. The Customs Practitioner Group want to discuss HMRC’s current procedure of dealing with appeal cases under Section 15F (8) of the Finance Act 1994.
The Review and Appeals Team are not able to complete formal departmental reviews within the statutory 45 days. It is therefore deemed that the original decision is automatically upheld without the case being reviewed. The consequence is that the trader has to take the case to a Tribunal without the case been properly considered by HMRC.
The CPG considers that when resources do not allow HMRC to undertake a review within 45 days on the receipt of an appeal, it should be standard practice for the review period to be increased.
Traders require a review to make a decision on whether to go to the costly expense of taking the case to a Tribunal.
KR confirmed that HMRC was aware of this issue and the R&A Team is looking at different ways of working with these situations. There have been significant changes within the team with the loss of two experienced review officers and other team members on secondment to other departments. Two new members of staff have been appointed. It is hoped that this will negate the need for cases to be deemed.
JM agreed that this was not good customer service and incidents will start to reduce as the new team members become more experienced. HMRC will examine how they provide this service and look at ways to plan more efficiently.
BW stated that HMRC do not have a general issue with staff shortages and the issue with Review and Appeals Team is beyond our control. They will build on their contingency plan to do better and provide an efficient review service. CRP and UCC are giving us an opportunity to bring in new resources and we are looking at this across HMRC.
Has your business been subject to a VAT review by HMRC?
You may be able to seek some remedy from HMRC if the matter was conducted as Barbara Scott has described to the JCCC. Or indeed the reviewer failed to meet any of HMRC’s stated guidelines. We will be pleased to discuss the options available to you without obligation.
Veracis Limited 0208 133 5484
Steve Plowman 07932 673761
Mike Vincent 07974 445142
Geoff Whittingham 07761 357894