Whether you’re a contractor who feels a decision has gone against you on your Self Assessment tax return, or you’re a small to medium-sized (SME) business owner who disagrees with the amount HMRC claim you owe in Corporation Tax, you can launch an appeal against these decisions, and any associated penalties, within thirty days of notification.
Understanding HMRC’s Decision
If your accountant usually handles your tax return you may not initially understand HMRC’s decision, what it relates to, and how you should approach appealing against it. In this situation you should contact your accountant, as they will be able to instantly explain the decision to you, and, if they also believe HMRC to be incorrect in their assessment, make an appeal on your behalf.
In most circumstances you will have to pay your own appeal costs when taking on a tax decision, regardless of the result.
How to Appeal Against Tax Decisions
You (or your accountant) can appeal a tax decision by using the appeal form that came with your letter, or by writing to them at the address on the top of your letter, including:
1. Exactly what you disagree with, and why.
2. What you believe the correct amount of tax you owe is, and how you came to that number.
3. Your tax reference number, name, company name (if applicable), and contact details.
4. Any extra information, or an explanation of anything you believe they missed when making their decision.
You must then sign your letter and await HMRC’s response.
Appealing Tax Penalties
To appeal against a tax penalty you must use the appeal form that comes with your letter, or follow the instructions on the letter if no form is present. If you’re a contractor you should fill in form SA370 to contest a Self Assessment penalty.
Though your accountant will advise you in this area, in general you may only appeal a penalty for (quoted from HMRC):
- Sending in your tax return late,
- Paying tax late,
- Not paying enough tax,
- Failing to keep adequate records,
- Filing an incorrect return.
In these instances, HMRC will cancel or change your penalty so long as you have a reasonable excuse for your lateness. They’re very specific in what they consider to be a reasonable excuse, having published a list online.
If you disagree with HMRC’s response to your appeal of a tax and/or penalty decision you can ask for a review of their decision “by an officer who wasn’t involved in the original decision”, or ask the tax tribunal (an independent body to HMRC) to hear your appeal.
Delaying Payment During an Appeal
When you appeal to HMRC about a direct tax decision, such as the tax due on your Self Assessment tax return, or any Corporation Tax you owe as an SME business owner, you may be able to delay paying the tax HMRC believe you’re due by writing to the office at the address on your original decision letter stating:
1. Your reason for believing the amount HMRC have asked you to pay is too much.
2. What you believe the correct figure is, and when you’ll be willing to pay it.
You’ll receive a letter in response telling you whether HMRC agree with your assessment, and how to move forward from their decision.
The same procedure applies to delaying tax penalties.
Experienced Accountants Can Help With an Appeal
As a self-employed contractor or the owner of an SME, having tax decisions go against you can be a serious drain on both your finances and your time.
To speak with experienced accountants to discuss a tax decision or penalty which you believe has unfairly gone against you, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.