Private and confidential

Michael Odulaja,

Fees Policy Team,

Room 4.38, 4^th Floor,

102 Petty France,

London

SW1H 9AJ

14 September 2015

Dear Michael,

Court and Tribunal fees: Consultation on further fees proposals

Introduction

The Northern Ireland Tax Committee of Chartered Accountants Ireland is pleased to have the opportunity to comment on the above consultation document published in August 2015. Information about Chartered Accountants Ireland and the Northern Ireland Tax Committee are provided on the previous page.

We would be happy to discuss any aspect of these comments and to take part in any further consultations/initiatives in this area that there may be in the future.

We wish to briefly comment on this consultation. Our comments are limited to the proposal to charge fees for applications to the Tax Chamber of the First-tier and Upper Tribunal, as outlined at paragraphs 128 and 134 of the consultation document.

Tribunal system backlog

The consultation document proposals are expected to generate a cost recovery percentage of around 26% taking fees together across both the First-tier and Upper Tribunals. It is not clear whether/how that cost saving will directly benefit applicants, for example by speeding up the Tribunal process.

Will the cost savings result in extra resource in the Tribunal system? The Tribunal system is facing a significant backlog of cases, as official statistical publications denote. For all tribunals combined, the caseload outstanding at the end of March 2015 was 373,200¹. The quantum of tax cases being heard continues to increase annually, mainly as a result of the Government’s crackdown on tax avoidance.

Chartered Accountants Ireland is supportive of any fair and proportionate measures taken to reduce tax avoidance. However imposing fees for accessing the tribunal system without an improvement in the time taken for appeals to be heard would simply be unfair.

Question 17: Are there any types of application or cases which you feel should be exempt from the fees?

Under section 28 of the Taxes Management Act 1970 (“TMA”) a taxpayer has the right at any time during an enquiry to make an application to the Tax Tribunal for a direction that HM Revenue & Customs (“HMRC”) issue a notice of closure within a set period. When a taxpayer makes such an application, we do not believe exercising this right should be subject to a fee. Such cases are not appeals, per se. The taxpayer is simply exercising their statutory right.

Under self-assessment, there is no statutory time period within which HMRC have to complete their enquiry. Thus, this right is often used by taxpayers in cases where HMRC appear to be dragging their heels, are continuing to pursue the enquiry but the taxpayer believes no adjustments should be made, or negotiations have reached an impasse.

There are also provisions which allow HMRC and a taxpayer to jointly agree to refer an issue (or multiple issues) to Tribunal whilst an enquiry is in progress (TMA 1970, s 28ZA, for individuals and FA 1998, Sch 18, para 31A for companies). In these cases, we do not feel a penalty should be charged. If one is imposed, it should only be paid by the losing party.

Deminimis limit

If fees are to be charged, we would suggest that an exemption is introduced for cases involving smaller amounts of tax. This will enable cases of principle to still be taken to Tribunal, despite smaller amounts of tax being involved.

Without a deminimis limit matters of principle will be out of reach for all taxpayers except where the amounts under appeal are relatively high. It is unfair to introduce hurdles for taxpayers when no such hurdles are placed in front of HMRC. More cases will be won by HMRC simply by default.

Loser pays

The vast majority of taxpayers do not appeal to the Tribunal on a mere whim; for many this is often the last resort. However if the fee system also permits taxpayers to claim costs against HMRC this may help persuade HMRC to attend to issues on a more sensible and timely basis. If there are to be any fees, we would suggest that upfront fees are not imposed and only levied, after the case has been heard, on the basis of “loser pays”.

Conclusion

Overall, we are concerned that the proposals will simply make justice less accessible to those who cannot afford it at a time when HMRC is not performing particularily strongly in terms of its own customer service standards². Quite often a taxpayer will resort to a formal appeal simply because HMRC is delaying matters and the taxpayer has exhausted all other avenues available.

Imposing fees could act as a deterrent in situations where there is a delay in resolving a dispute. There is a concern that once the principle of charging fees has been introduced, fees will inevitably rise in future.

HMRC has access to a very deep pocket, the public purse. Taxpayers do not. Put simply, the charging of fees is a bar to getting justice for taxpayers in situations where the system is already stacked against them.

Freedom of Information

We note the scope of the Freedom of Information Act with regards to this submission. We have no difficulty with this response being published or disclosed in accordance with the access to information regimes. This response will be published on our own website and will be available to all of our members and the general public.

Do not hesitate to contact Brian Keegan brian.keegan@charteredaccountants.ie or Leontia Doran leontia.doran@charteredaccountants.ie of this office should you require anything further.

Yours sincerely,

Paddy Harty

Chairman

Northern Ireland Tax Committee

Chartered Accountants Ireland

Source: Chartered Accountants Ireland. www.charteredaccountants.ie.

¹ Tribunals and Gender Recognition Statistics Quarterly, Ministry of Justice Statistics Bulletin, June 2015

² HMRC Business Plan Indicators, HM Revenue & Customs, July 2015