Need to know: overview of the tribunal process

Navigating tax disputes can be a complex and daunting process. 

This “need to know” series sheds light on the essential elements. In this note, we provide an overview of the process once appeals have been notified to the First-Tier Tribunal (the FTT) and categorised as standard or complex. 

For information on appealing a decision to HMRC and notifying appeals to the FTT, see the previous article in this series “Need to know: appealing an HMRC decision".

Allocation of cases by the FTT

When the FTT receives a notice of appeal, they will issue a direction allocating the appeal to one of the following four categories.

Next steps in a standard and complex case

• The FTT will send a copy of your notice of appeal to HMRC.
• Within 60 days of the day the FTT sends the notice of appeal to HMRC, HMRC must send a statement of case to you and the FTT. The statement of case must state the legislative provision under which the decision under appeal was made and set out HMRC’s position in relation to the case.
• Within 42 days after the day that HMRC has sent the statement of case, each party must exchange a list of documents (which are documents that are in the party’s possession or that they have a right to possess and that they intend to rely upon or produce in the proceedings). Unlike civil proceedings, there is no obligation to disclose all documents that are relevant. However, this does not mean that you can withhold key documents that do not support your case as there remains a duty not to mislead the FTT.
• Each party must allow the other party to inspect or take copies of the documents on the list. In practice, the parties will often send copies of documents when they provide the list, or shortly after.
• At this point (or possibly before lists of documents are exchanged), the FTT should issue further case management directions, which set out the remaining steps to hearing. However, the parties can also agree directions between themselves and seek the FTT’s consent to those directions. This is very common in a complex case where there is likely to be more witness evidence and expert evidence may be necessary.

Further case management directions

Regardless of whether the FTT issues further case management directions or the parties agree directions, they will need to include provision for the following. 

• Exchange of witness statements: these are statements from individuals who you (or HMRC) want to call to give factual evidence at the hearing. The evidence in the statement will be taken as read, but the witness can then be cross-examined by the other party.
• Provision of listing information: this is the information provided to the FTT to allow them to list a hearing. Most importantly, it includes the dates the parties are available for a hearing.
• Preparation of a hearing bundle: this is a bundle of documents agreed by the parties which includes all documents the parties are relying on to support their case, as well as tribunal directions, inter-party correspondence, and documents set out in the parties’ list of documents.
• Exchange of skeleton arguments: this is a document that the parties must send to each other and the FTT outlining the factual and legal issues on which their case is based.
• Preparation of an authorities bundle: this bundle should include all the relevant authorities (case law or legislation) that are referred to in the skeleton arguments and will be referred to during the hearing.

It will usually be you, as the taxpayer, that is responsible for preparing the bundles.

The parties may also want to have directions that allow for expert evidence to be given, a statement of agreed facts and issues, reply witness statements and skeletons, or that deal with other bespoke issues. These directions will need to be consented to by the FTT, which has a wide power to issue directions in relation to the conduct or disposal of proceedings.

Attending the hearing

Once the parties have provided the FTT with their listing information, the FTT will list the hearing and notify the parties. FTT hearings will always have a legally qualified judge sitting, and they may also have a specialist non-legal “Member”, such as an accountant. 

Although remote hearings are possible, standard and complex hearings will usually be heard in person. Witnesses will usually be required to attend to be cross-examined on their evidence, although it is possible to seek permission for them to give their evidence remotely.

It may also be possible to have a link set-up so that the hearing can be viewed remotely, even if those speaking at the hearing must be there in person. 

At the end of a hearing, judgment will usually be reserved. This means that the Judge (and Member if relevant) will take time to consider the arguments they have heard and to write up the judgment. This will usually take at least three months, but it can be quicker, and it can also be a lot longer. 

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For expert advice on handling tax disputes, reach out to a Macfarlanes representative today. Visit our Tax Investigations and Disputes page for in-depth information, and bookmark our Need to know: tax disputes hub for ongoing insights and updates.