I beat HMRC at a Tax Tribunal. So, I was within the one in four chance of beating HMRC at tribunal. I did win HMRC at a Tribunal. Further, I also established legal precedent in UK. I did all on my own.
Some would say I was lucky. I prefer to think that I did a good job. It was not easy, I recognise. I wanted to give up many times. So, how did I make it? Let me tell you. Hope my story can help.
First, it all started with one question: why did the interim relief payments have the same taxation as a standard payroll?
The answer, I was told at the time, was because the interim relief payments were linked to a contract of employment.
Well, yes but, this link is under special circumstances only. All I had as answer was that these special circumstances were so unique that there was no much legislation about. So, basically, it sounded as if one could do nothing else.
So I decided to explore by myself.
First tip: always ask the question you have in your mind and when you hear an answer like “this is what it is”, “ there is no much legislation about it”, …or similar, do your own research. This is what I did and it was really worth it. It is fair to recognise that I am not a conformer.
Then my research time started. I had to dig into what the full meaning of interim relief payments was. I found out two Appeal Employment Tribunal judgments that provided a very clear explanation. They also explained what the legal link with the employment contract was. This was key to support my argument against HMRC. So, this research, of my own, gave me the legal basis to defend the special circumstances.
Second tip: open your research to sources and areas outside tax. You may find useful information that you can use to support your tax case, as I have just explained above.
Once I was clear on the meaning of the interim relief payments and the legal link with the contract of employment, I submitted my tax claim to HMRC.
HMRC answered me with reasons and grounds to reject my claim. I had some weeks to answer back.
Third tip: do your own research on the reasons and grounds HMRC gives you to reject your claim. Look for what tax/legal advisors review is on those reasons or grounds. Usually, HMRC will refer to tax cases. Look for what tax/legal advisors say about those tax cases. You will understand the point of law of that case, so you will be able to compare it with your own one and conclude whether it applies to your particular case or not. If it does not, then, answer back, explaining your argument to HMRC. As I explained above, keep your research open to other areas outside tax. You can get valuable information that will help support your case.
This is what I did. For three years.
Fourth tip: you may have guessed it….be patient and keep going.
Each correspondence with HMRC could take up to six weeks to get back to you and you, then, have another some six weeks or so, to answer back. The number of weeks is not fixed, but it gives you a guidance. As I said above, each HMRC answer to you is a precious source of information to help you argue your case. So keep going. Keep researching the grounds and reasons HMRC gives you to reject your claim. Keep answering back.
Don’t feel put off by the length of time or by the work. I did it on my spare time and was able to enjoy my private life as well. Doing effective and efficient google searches help a lot.
In my case, my abilities to manage my time and remain focused were tested. As you can imagine, resilience was mandatory and I clearly strengthened mine during three years of receiving HMRC letters rejecting my legal argument. Despite many of their letters being repetitive, my responses were always polite, objective and never discredited the sender or HMRC.
After a while, HMRC will tell you that you have reached the end of their process and that the only and final step is a First Tier Tax Tribunal.
By this time, you will have nailed down the argument on your case together with supporting documentation. You only need to write a summary highlighting the key points of your argument and referring to your supporting documentation.
Fifth tip: be very well organised and diligent with the documentation you get from your research. It will support your argument in front of a Tax Tribunal. Further, the bundle to present to a Tax Tribunal includes as well all the correspondence you have exchanged with HMRC. So it pays off being well organised as it will save you time later.
At the end of the HMRC’s claim process you can have much more clarity on the strength of your case. It will be difficult for somebody else that has not carried out the research you have and that has not either gone through the argument of your case in every correspondence with HMRC as you have, to assess the merits of it.
Sixth tip: sleep on your case. Don’t look at it for a while, (e.g.: a week or more). Then, go back to it. Read it. You will be able to say whether you are ready for a First Tier Tax Tribunal (FTT) or not.
So you have decided to take your case to a FTT. Go for it! For the avoidance of doubt, I do not mean that anyone willing to pay less tax should go to a Tax Tribunal and take a chance.
Get familiar with the Tribunal protocol. You can ask the Tribunal service about it and where you can find more information. There are also some legal books that explain the process of a tax hearing. You may be familiar with other tribunals with a similar protocol that you can follow (e.g.: Employment Tribunal, Civil Tribunals- in case of a divorce, for example).
Tax Tribunals, and Tribunals overall, are not the Boogey Man. So, after all your work, and with all your documentation on your case, feel very confident that you are fully entitled to be heard. The Tribunal will listen to both sides, so be ready to explain the key points of your argument by yourself.
Seventh tip: rehearse in front of the mirror. I am not kidding! Practice how you will explain the Tribunal the argument of your case. The mirror will help you to, a) be in front of someone as if this person was the Tax Tribunal, and b) show you how the Tribunal will see you. Take into account that body language is very important as it sends messages too. Ensure your body language messages are aligned with your words. Have fun in front of the mirror. You will end up feeling confident. This is key when you are explaining your argument in front of the Tax Tribunal.
The Tribunal will also take a copy of your bundle and of the HMRC one. As I said above, it pays off being well organised with all the documentation of your case. This way the Tribunal can also navigate through it easily. After this point, that’s it. Relax. Give yourself a treat after all your work and wait for the Tribunal to issue the judgment.
What if HMRC wants to settle just before going inside the Tribunal? Well, it did not happen to me. All I can say is that you know, by then, your case and how strong it is vs. HMRC’s one. I’m confident you will be able to take the right decision.