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Anxious About a UK Exit Tax? What You Can Do
Could the UK introduce an exit charge? Understand the existing tax traps when leaving the UK, how a future charge might work and what split-year treatment may mean.
Received an HMRC Schedule 36 Notice? How to Respond and Appeal
If HMRC has issued or threatened to issue a Schedule 36 information notice, do not ignore it. You may have only 30 days to appeal, and failure to comply with a valid notice can result in financial penalties.
However, HMRC cannot simply request anything it chooses. The information or documents must be reasonably required to check the relevant tax position and must fall within HMRC’s statutory powers.
Schedule 36 to the Finance Act 2008 (“Schedule 36”) gives HMRC powers to obtain information and documents. HMRC may issue a taxpayer notice under paragraph 1, a third-party notice under paragraph 2, or a financial institution notice under paragraph 4A. Different safeguards and appeal rights apply to these categories.
In R (Jimenez) v First-tier Tribunal (Tax Chamber) [2019] EWCA Civ 51, the Court of Appeal confirmed that HMRC could issue a paragraph 1 taxpayer notice to a taxpayer residing outside the UK.
A taxpayer can generally appeal against the whole of a paragraph 1 notice or against individual requirements within it. The appeal must ordinarily be made in writing to the HMRC officer who issued the notice within 30 days, accompanied by the grounds of appeal.
There is generally no right of appeal against a requirement to produce the taxpayer’s statutory records, or where the First-tier Tribunal approved the notice before HMRC issued it. If the 30-day deadline has expired, it may still be possible to seek permission to make a late appeal.
Key limits include that the information must be “reasonably required”, the request must not be excessively broad or burdensome, there must be a rational connection with the tax position being checked, documents must be in the recipient’s possession or power, older documents may require authorised officer approval, and legally privileged material is protected.
Do not ignore the notice. Check the deadline immediately, engage with HMRC where appropriate, identify precisely what is disputed, and seek specialist advice where the deadline is approaching, deliberate conduct is alleged, offshore assets are involved, or privileged documents may be in issue.
Missed an HMRC Appeal Deadline? How to Make a Late Tax Appeal
If you have missed the deadline for appealing an HMRC assessment or penalty, you may still be able to bring a late appeal. You should act immediately: the length of the delay, the reason for it and what you did after discovering the missed deadline can all affect whether the appeal is admitted.
For many direct tax decisions an appeal must normally be made in writing to HMRC within 30 days. For many indirect tax decisions, including VAT, the appeal is ordinarily notified to the First-tier Tribunal within 30 days. Penalties have their own appeal provisions. Always check the decision letter carefully.
Make the application for permission to appeal late as soon as possible. For direct tax appeals under section 49 TMA 1970 the late appeal should normally be sent to HMRC first. If HMRC refuses, the taxpayer can apply to the FTT for permission to appeal out of time.
The leading authority is Martland v HMRC [2018] UKUT 178 (TCC). The FTT applies a three-stage approach: (1) how serious and significant was the delay; (2) why was the appeal late; and (3) what do all the circumstances show.
An application for permission to appeal late is not a trial of the underlying tax dispute. The merits may have some relevance where the appeal is obviously hopeless or obviously strong, but the FTT’s primary focus remains on the delay, the explanation and the surrounding circumstances.
A late-appeal application should generally include a copy of the HMRC decision, the proposed grounds of appeal, a clear chronological account of the delay, a witness statement where needed, relevant medical evidence, correspondence with HMRC or advisers, and evidence showing when the missed deadline was discovered.
Consider whether the underlying tax appeal has a proper basis, how long the delay is, whether the likely benefit is proportionate to the cost and stress, and the costs rules that apply in the FTT.
You Have Appealed to the First-tier Tax Tribunal: What Happens Next?
Filing a Notice of Appeal with the First-tier Tribunal (Tax Chamber) is only the beginning of the tax appeal process. Before the appeal reaches a hearing, the parties may need to deal with HMRC’s Statement of Case, documentary and witness evidence, hearing bundles, legal authorities and written arguments. The exact procedure depends on the category and complexity of the appeal. Most importantly, read every direction issued by the FTT carefully.
Once the FTT has accepted a complete Notice of Appeal, it will normally acknowledge the appeal, send it to HMRC, allocate it to a case category, issue directions, address payment or hardship issues where relevant, and decide how the appeal should be managed. The four principal categories are Default paper, Basic, Standard and Complex.
In a Standard or Complex appeal, HMRC must normally provide its Statement of Case within 60 days. The SoC should explain HMRC’s position, the facts it considers agreed or disputed, the relevant legislation and case law, and the outcome it asks the FTT to reach.
An appeal can sometimes be resolved without a full FTT hearing. HMRC’s ADR process uses a mediator to help the parties identify and resolve disputed issues. ADR does not automatically suspend the FTT proceedings.
The FTT has wide powers to manage appeals. Either party may apply for a direction. In Standard or Complex appeals each party will normally provide a list of documents and witness statements. Witness statements should be in the witness’s own words and contain a statement of truth.
One party will normally prepare the electronic hearing bundle and authorities bundle. Skeleton arguments should be a concise roadmap of the case. Before the hearing, review all key documents, confirm witness arrangements and test technology for remote hearings.
The FTT will usually issue a reserved written decision. Different deadlines apply for costs applications, set-aside applications and permission to appeal to the Upper Tribunal. Specialist representation should be considered where the amount at stake is substantial, the legislation is complex, or HMRC alleges deliberate conduct.
Rebecca Sheldon has significant experience appearing before the First-tier Tribunal, Upper Tribunal and Court of Appeal. She can be instructed directly as a public access barrister.