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SA
ENQUIRIES 6
GOING TO THE GENERAL COMMISSIONERS
26.01.06
Many
accountants and tax practitioners seem very reluctant
to pursue an appeal before the Commissioners. This is
disappointing. Of course there is a degree of formality
involved in an appeal, particularly one before the Special
Commissioners, but if you are competent in tax, a reasonably
good speaker and able to marshal your thoughts in a
logical manner and conduct an argument there is no need
to be diffident about taking a simple appeal before
the General Commissioners.
An appeal against a section 19A notice is a good starting
point. It is wholly a question of fact, so you do not
need to know much law (but of course study section 19A
itself) and as there is no right of appeal there is
no risk of things going further if the Commissioners
decide in your favour.
The most important aspect of an appeal hearing is preparation.
More on that in a minute.
The second is to realise that the Commissioners know
nothing about the case other than what you and HMRC
tell them at the hearing. They may well know nothing
about tax other than what they are told at the hearing
- or worse, what someone else told them at a previous
hearing and, of course you have no way of knowing whether
it was either correct or complete. They are unlikely
to have access to the legislation or to any tax cases
to which you wish to refer.
This means that even a simple hearing is going to take
some time. You are going to have to explain the case
to them, you are going to have to take them through
the bits of section 19A that you want them to understand,
you are going to have to read out the bits of any tax
cases you want them to know about and, of course, you
are going to have to go through the section 19A notice
paragraph by paragraph and explain why you do not believe
that what is being asked for meets the three tests set
out in the previous article.
The Commissioners know it is going to take some time.
They are not going to think badly of you because you
cannot cover everything in 10 minutes. There is no rush.
Do not worry about any other cases on their list; they
are not your problem. Take all the time that you need
to get your case over to them. What you say is your
client's only chance to get the notice set aside, so
the case deserves to be given all the time that it needs.
Having said that, the Commissioners may think badly
of you if you waste their time by coming ill prepared,
jumping from one topic to another and back again, or
presenting things in such a muddled way that they have
to keep asking you questions to understand your points.
It won't help you or your client either. You will become
flustered and your client's case could well not be fully
understood.
However with adequate preparation there is little likelihood
of such things happening, which is why preparation is
so important. Probably the most important part of preparation
is to prepare a "bundle" of papers and take
with you at least six copies, one for you, one for HMRC,
one for the clerk to the Commissioners, and three for
the Commissioners (these will normally be either 2 or
3 of them to hear the case).
The bundle should contain everything to which you want
to refer the Commissioners in a logical order. What
you include obviously depends on the facts. The order
I would use for a section 19A appeal is:
1. The section 19A notice and the letter appealing against
it.
2. A copy of section 19A and any other legislation to
which I want to refer.
3. The correspondence between HMRC and the taxpayer
in relation to the enquiry from the issue of the section
9A notice onwards.
4. The tax return and accounts.
5. Full copies of any tax cases to which I wish to refer.
This is the order in which I am likely to want the Commissioners
to look at things. I want to start by explaining that
the appeal is against a section 19A notice and let them
know it has been duly appealed against. I then want
to take them through the bits of the legislation that
I want to be sure they understand. I probably then want
to take them through the correspondence we have already
had in relation to the disputed items, because in that
way I can ensure that I at least tell them everything
that I have previously told the Officer and do not overlook
any of my arguments. In doing so I may want to refer
them to entries in the tax return or to tax cases I
have quoted at HMRC. Even if I don't, when I have taken
them through the correspondence I will want to put forward
further arguments and may need to refer them to such
documents at that stage.
Each page in the bundle should be numbered consecutively.
In that way you can refer the Commissioners to "page
28", which they can easily find, instead of "the
second page of the letter of 18 December" which
everyone would have to search for.
The Commissioners would prefer you and HMRC to jointly
produce a single bundle rather than each producing your
own. In a contentious hearing that is almost essential,
but for a section 19A hearing it probably does not matter
too much as you are both likely to want to refer to
the same things. Preparing a joint bundle has the added
advantage that you know to what the Officer intends
to refer; it has the disadvantage that he knows to what
you intend to refer.
Also prepare in advance a brief summary of the points
you want to make in the order you want to make them.
Note on this the page numbers of documents to which
you want to refer the Commissioners. On your copy of
the bundle (but not in the others) highlight the particular
bit of the document to which you wish to refer. This
is your aide memoir to help you present your case.
The format of the hearing is up to the Commissioners,
but the usual order is:
1. The chairman of the Commissioners explains that they
are an independent body.
2. You put your case and call any witnesses you have
(although it is unlikely you will need to introduce
oral evidence in a section 19A appeal where the issue
is solely whether or not the three preconditions for
the section to apply are met).
3. The Officer puts his case.
4. You have an opportunity to respond to the Officer's
case.
5. The Commissioners may ask you both to leave the room
while they make a decision.
6. They call you both back and tell you what they have
decided.
Take a pad with you. When the Officer makes his case
you will want to jot down the points with which you
disagree or that you want to stress to the Commissioners
when you respond to the Officer's case. If you want,
take an assistant to take the notes, and have a quick
look through his notes before you start your response
(but the Commissioners will not take kindly to your
sitting reading for several minutes so you need to be
able to do this rapidly).
Address yourself to the Chairman of the Commissioners,
calling him Sir or Madam as the case may be. If you
are unsure of any procedural things ask the Commissioners.
They won't mind. Indeed if you are worried that you
have never taken an appeal before explain that at the
beginning. They may suggest that the Officer opens the
case instead of you. The disadvantage of that is that
whoever opens has the opportunity to respond to the
others case, so it is normally best to politely reject
such a suggestion, but if it is your first case you
might feel more comfortable letting the Officer start
and accepting that disadvantage. It can significantly
reduce your time on your feet (figuratively, that is;
you don't actually have to stand unless you want to
and it is generally easier to go through your bundle
if you are sitting) as the Officer will already have
gone through most of what you would need to cover.
Each item in a section 19A notice is considered separately
by the Commissioners. They can uphold the notice in
relation to some items and set it aside in relation
to others. It is not all or nothing.
For a contentious hearing, ie in relation to the quantum
of income, it is normal to try to agree a Statement
of Facts with the Officer. This simply lists the facts
that you can both agree on. There is no need to bring
evidence to prove those facts. This will obviously shorten
the hearing. However there usually is no need for such
a statement for a section 19A hearing.
Finally don't worry about feeling nervous. I always
feel nervous. It is a lot better than feeling cocky
and once you get started, provided that you have prepared
well, you will find that your thoughts flow fairly readily.
See also:
SA
Enquiries 1 - Receipt on the Opening Letter
SA Enquiries 2 - Handling
Correspondence
SA
Enquiries 3 - Records
SA Enquiries 4 - Meetings
SA Enquiries 5 - Section
19A & Para 27 Notices
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January 2006
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