Most appellants have never seen a tribunal before the morning of their own hearing. This guide walks through the whole thing: how cases are categorised and what that means for costs, what the directions require, the order of events on the day, what giving evidence is actually like, who has to prove what, and what happens after the decision.
On this page
Before the Hearing: How You Got Here
By the time a hearing is listed, the appeal has already passed through several stages: an appealable HMRC decision, an appeal, possibly a statutory review, notification to the First-tier Tribunal, allocation to a category, and a period of directions. What happens at the hearing is shaped almost entirely by what was done in those earlier stages.
The four categories
| Category | Typical subject | Hearing | Costs |
|---|---|---|---|
| Default paper | Fixed penalties, simple reasonable excuse | Usually decided on the papers with no hearing | Each side bears its own |
| Basic | Straightforward appeals, modest sums | Short hearing, minimal directions, limited document exchange | Each side bears its own |
| Standard | Most substantive appeals | Full hearing with directions, witness statements and a bundle | Generally each side bears its own |
| Complex | Large sums, novel points, lengthy hearings | Full hearing, often several days | Costs shifting applies, but see the opt-out below |
Directions
In standard and complex cases the tribunal issues directions setting out what each party must do and by when: HMRC serves a statement of case; the parties exchange lists of documents; witness statements are exchanged; a hearing bundle is prepared, usually by HMRC; skeleton arguments may be required. Missing a direction has consequences, as our analyses of BPP Holdings and Denton explain, and those consequences apply to HMRC too.
Where and How the Hearing Takes Place
Hearings are held at tribunal centres around the country, and remotely by video. Remote hearings are now routine for shorter cases; longer cases with substantial oral evidence are more often heard in person. If you have a preference, or a reason why one format is unsuitable, say so early. The tribunal will usually accommodate a reasoned request.
The tribunal is normally either a judge sitting alone, or a judge with a non-legal member who has accountancy or industry experience. Hearings are usually held in public, and decisions are published.
The Order of Events
- Preliminaries. The judge confirms who is present, identifies the issues to be decided, checks the bundle is agreed and deals with any outstanding applications: late evidence, an adjournment, a witness attending remotely.
- Opening. The party carrying the burden usually goes first. In an appeal against an assessment that is normally the appellant; in a penalty appeal it is normally HMRC. The judge will say who they want to hear from first.
- Evidence. Witnesses confirm their written statements as true, then face cross-examination by the other side, then re-examination, then questions from the tribunal.
- Submissions. Each side argues its case on the law and the evidence. The tribunal will ask questions. This is a good sign, not a bad one.
- Decision. Occasionally given orally at the end. More often reserved, with a written decision following in the weeks afterwards.
Giving Evidence
This is the part that decides most appeals, and the part appellants prepare for least.
In any case where the issue is what someone knew, believed or intended (whether behaviour was deliberate, whether an excuse was reasonable, whether a trader should have known of a connection to fraud) the tribunal has to form a view about the witness. It cannot do that if the witness does not attend.
Practical points that make a difference
- Answer the question asked. Short answers are better than long ones. If you do not know, say so.
- Do not guess at figures or dates. “I don’t recall, but the document at page 214 shows…” is a good answer.
- Concede what is true. An appellant who accepts the parts of HMRC’s case that are correct is far more credible on the parts that are not.
- Address the difficult points yourself. If the records are poor, explain why. If money was taken out of the business, explain what it was for. A weakness explained in evidence in chief is far less damaging than one extracted under cross-examination.
- Speak to the judge, not to the HMRC representative.
- Take your time. There is no advantage in answering quickly.
Who Proves What
The allocation of the burden shapes the whole hearing. In outline:
- The amount of an assessment is wrong: the appellant must prove it, and so far as possible establish the correct figure.
- A discovery assessment is valid: HMRC must establish the s29 conditions.
- Behaviour was careless or deliberate: HMRC must prove it, applying the subjective test in HMRC v Tooth.
- A penalty was properly imposed: HMRC.
- Reasonable excuse: the appellant, applying the four stages in Perrin.
- The underlying liability, raised as a defence to a penalty: the appellant, following HMRC v Sintra Global (currently under appeal to the Supreme Court).
The standard of proof throughout is the ordinary civil standard, the balance of probabilities.
Preparing: A Checklist
- Reduce the case to a list of issues. What exactly does the tribunal have to decide? Two or three well-framed issues beat a general complaint about HMRC’s conduct.
- Check the bundle. Make sure every document you intend to rely on is in it and correctly paginated. Applying to add documents on the morning of the hearing rarely goes well.
- Prepare a chronology. A one-page dated chronology is the single most useful document you can hand up.
- Prepare a reconciliation schedule in any quantum case: HMRC’s figure, your figure, and each difference explained line by line.
- Bring the authorities you rely on, in a small bundle, with the relevant passages marked.
- Prepare your witnesses. Not to script them, that is improper, but so they know the format, have read the documents, and are not surprised.
- Work out what you will concede. Deciding this in advance is far better than deciding it under pressure.
- Consider settlement one last time. An appeal can be settled by agreement under s54 TMA 1970 at any point before the decision.
After the Hearing
- The decision. Usually reserved and issued in writing, with findings of fact and reasons. Summary decisions are given in some categories; full written findings and reasons can be requested, and must be if you are considering an appeal.
- Correcting the decision. The tribunal can correct clerical errors, set aside a decision on limited procedural grounds, and review its own decision in defined circumstances.
- Appealing. Permission to appeal to the Upper Tribunal must be sought from the First-tier Tribunal first, normally within 56 days of the full written decision, and lies only on a point of law.
- Payment. Tax and penalties confirmed by the decision become payable, with interest. If you are appealing further, consider whether postponement or a payment arrangement is needed.
- Costs. In most categories each side bears its own. The tribunal can award costs where a party has acted unreasonably in bringing, defending or conducting proceedings. A power that applies to HMRC as well.
Frequently Asked Questions
Is a tax tribunal hearing like going to court?
Less formal, but with the same seriousness. There are no wigs or gowns, everyone stays seated, and the judge is addressed as “Judge”. Tribunals are used to unrepresented appellants and will explain the process. But the burden and standard of proof apply, witnesses are cross-examined, and the decision is binding and usually published.
Do I have to give evidence?
Not as a matter of obligation, but in most cases you should. Where the issue is what you knew, believed or intended (whether behaviour was deliberate, whether an excuse was reasonable, whether you should have known of a connection to fraud) the tribunal has to form a view about you, and it cannot do that if you do not attend. Appellants who do not give evidence in those cases are at a serious disadvantage.
Will I have to pay HMRC's costs if I lose?
Usually not. In the default paper, basic and standard categories each side generally bears its own costs. Costs shifting applies in the complex category, but an appellant can request in writing, within 28 days of being notified of the allocation, that it should not apply. The tribunal can also award costs in any category where a party has behaved unreasonably, and that applies to HMRC too.
How long until I get the decision?
Occasionally the judge gives a decision orally at the end of the hearing. More often it is reserved and issued in writing some weeks later, with findings of fact and reasons. If you are considering an appeal, make sure you have the full written findings and reasons, because permission to appeal must be sought within a set period from that document.
Can I appeal if I lose?
Only on a point of law, and only with permission, sought from the First-tier Tribunal first, normally within 56 days of the full written decision. Findings of fact, and particularly findings about a witness’s credibility, are very difficult to disturb, as Edwards v Bairstow establishes. That is why the First-tier hearing is in practice your only chance to establish the facts.