HMRC have recently published figures detailing the success rate of their internal review process compared with taking cases to tribunal. Taxpayers can ask HMRC for an internal review if they are not satisfied with a decision of the Inspector, prior to taking it to the tax tribunal.
There were some interesting figures revealed:
On internal review – 44% of non-penalty cases were overturned, whilst 75% of VAT penalty cases and 35% of non-VAT penalty cases resulted in a cancelled or reduced penalty.
This compares to a success rate at the tribunal for taxpayers of only 21% (according to HMRC).
HMRC also state that only a ‘small minority’ of their decisions are challenged, meaning many incorrect decisions could remain in place.
These figures show that requesting an internal review can be a cost-effective step for taxpayers before the need to resort to the tribunal, and should be considered more often.