Any phrase with the two words ‘tax’ and ‘tribunal’ next to each other is bound to cause some kind of apprehension, especially when you have no idea what lies ahead, despite knowing it is extremely important in determining a potential tax rebate. Therefore, this short guide provides a few useful tips on what to expect and how best to prepare for the tax tribunal.
What is a Tax Tribunal?
A tax tribunal is a specialized court that, in most instances, is required to resolve disputes between taxpayers and tax authorities, such as the Internal Revenue Service (IRS) in the United States of America or Her Majesty’s Revenue and Customs in the United Kingdom. The body is usually independent and impartial, which gives taxpayers the possibility to question tax authorities’ decisions.
Courts or tribunals are comparatively more informal than courts and attempt to reach results much faster than the common courts. They even offer individuals and businesses the chance to appeal decisions of tax authorities, such as tax assessments, penalties, or other judgments.
When Would you Need a Tax Tribunal?
You will need to approach a tax tribunal if you disagree with some ruling made by any tax authority. Some common causes for approaching the tribunal are:
- Disputed Tax Assessment: If you believe that you are being overcharged on taxes and the amount so assessed is high.
- Penalty: If you are taxed some fine or penalty that you think is wrong or no cause exists for.
- VAT or Sales Tax: When your business has been involved in some VAT or sales tax disputes.
- Income Tax Deduction: When you feel that you are being deprived of the deduction of certain items or credits during the computation of income tax.
First and always preferred would be for you to settle the dispute directly with the tax authority. You go to the tribunal only if you cannot agree.
How Do I Find My Way Through the Tax Tribunal Process?
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The procedure varies depending on the country. However, most tax tribunals work in about the same way. Here is what you might expect:
Appeal the Decision
Before trying to go to a tax tribunal, you will first need to formally appeal the decision to the tax authority. Generally, most countries require a short time frame to appeal. In the UK, for example, you have 30 days in which to appeal concerning any HMRC decision. Generally, in the US, you have 90 days to appeal an IRS decision.
If the appeal is turned down or you do not accept the decision, you can then appeal to the tax tribunal.
Submit a Tribunal Application
Once you have decided to proceed to the tribunal, you are required to make an application for the tribunal, which will entitle the provision of further information regarding your case, why you have any reasons against the taxation decision, and copies of various documents, including tax returns, notices or any letters which had been exchanged between the taxation authority with you.
In all but a few cases, you can submit your appeal by letter or through the web. The charge to appeal, which is generally low, is remitted in some countries for those with low incomes.
Keep HMRC in the loop.
All documentation relevant to your appeal case must be sent to HMRC in good time prior to the hearing. This includes forms, accounts, invoices, and letters, and you will receive similar information from HMRC to take to the hearing with you. Again, take your time with this. A hearing is, after all, designed to bring a coherent structure to the process so no documents are lost in translation.
The Tribunal Hearing
It is where you will present your case before a tribunal judge or a panel of judges. Administrative hearings are usually much less formal than court hearings, and no special clothing is required. The rules of evidence are also considerably less formal in an administrative hearing.
In a hearing, you and the tax authority are given the chance to make your respective cases, provide evidence, and answer questions put to you by the tribunal.
You Present Your Case: You explain why you believe the tax authority’s decision is wrong, then present evidence for your contention.
The Tax Authority Responds: A tax authority representative will present their case as to why their decision should stand.
Tribunal’s Determination: The tribunal will then consider all the evidence put before it and determine the case. You could decide on the day of the hearing, or the determination will be conveyed to you later in writing.
Once all information surrounding your tax dispute case has been received, the tax tribunal can decide your appeal there. Hence, an actual hearing only becomes a possibility if this is the option that you prefer. In most cases, hearings are advantageous as you have the opportunity to ask and answer questions publicly as well as call supporting witnesses.
Receipt of the Tribunal’s Determination
Once the decision has been reached, both parties must receive the determination in writing. The determination will either:
- If the tribunal rules in your favor, the tax authority would have to correct or reverse its decision.
- The tribunal rules in favor of the tax authority; thus, the former’s decision stands.
- If you are successful in your case, the tax authority will usually have to comply with the tribunal’s decision immediately.
- If you are unsuccessful, you could also appeal the case to a higher court, but this can take considerable time and effort.
Take your time
You will be notified of your hearing date at least two weeks in advance, along with details of what must be done on your part, so you have plenty of time to plan for unfamiliar territory and seek advice if necessary.
Identify key questions and witnesses.
The opportunity to publicly ask questions at your hearing to the tax tribunal panel, which includes HMRC representatives, really cannot be passed up, so ensuring you have the right questions prepared is key. Likewise, verbal and public support of your appeal from one or more key witnesses can go a long way in helping settle your dispute.
You do not have to present
Hearing regulations mean that you can allow another person to present your case on your behalf. A legal professional who has closely followed and helped with the case is usually the best choice. However, this position is open to literally anyone, provided you give them the green light to do so.
Professional help
Seeking help from those experienced and knowledgeable when it comes to all forms and stages of tax disputes hugely eases up the whole procedure and ensures all necessary legalities are covered, too. Qualified professionals carefully study all documents to fully assess your situation and prepare yourself and any witnesses so you have the best chance of success at the tax tribunal hearing.
Conclusion
In fact, with appropriate preparation and understanding of what happens at tax tribunals, you will be quite confident navigating the process. Therefore, these steps will help you whether you are contesting a tax bill, disputing a penalty, or resolving a VAT issue, among others.
