The protection of ancient rights and liberties… of some

On the 22nd of July, the Ministry of Justice announced that it would be consulting on introducing fees for those remaining tribunals which do not currently charge. Importantly, this includes the first tier and upper tier tax tribunals. The government hopes that by doing so, it might be able to recoup some of the costs of running the courts and tribunals service.

Commentators have been outraged by the proposal. Jolyon Maugham QC remarked that it was “flat wrong for the state to charge you for disputing what it charges you”. Law Society president Jonathan Smithers commented that the proposed reform led to a “feeling there’s a fairly heavy-handed state”. Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, remarked that the introduction of fees put up “a cost barrier for those who could have only made an arbitrary mistake”.

Indeed, high-minded constitutionalists might at this juncture recall Article 39 of the Magna Carta which provides that:

No freeman shall be arrested or imprisoned or deprived of his freehold or outlawed or banished or in any way ruined, nor will we take or order action against him, except by the lawful judgment of his equals and according to the law of the land.

As such, limiting the ability of individuals to access the courts can be seen as an unjust infringement on this constitutional text. This is even more compelling, as identified by AccountingWeb, when it is added that two-thirds of those going before the tax tribunals are not represented by an agent (this suggests at least that there is a sizeable portion of litigants who would struggle to afford the charge). Or that the fee would render effectively pointless the pursuit of litigation over smaller amounts, such as automatic £100 fines.

One might counter that charging fees merely deters spurious claims, which results in the backlogging of the courts. This does not hold on the facts. The effect of the introduction of fees in employment tribunals in 2013 for instance has resulted in an 83% drop in sex-discrimination claims “with no surge in the success rate, so far—suggesting that people with strong cases have been priced out”.

The most persuasive argument for not introducing fees for the tax tribunal, however, is simply pragmatic. The success rate of HMRC through the tribunals is far from convincing. In 2013-14 and in 2012-13, three quarters of decisions made by First-tier tribunal were in HMRC’s favour. However, just 61% in 2011-12 were decided in HMRC’s favour. The number of HMRC assessments which are successfully internally reviewed is particularly uninspiring. In 2013-2014, there were a total of 38,621 reviews; 18,109 (47%) were upheld; 6,362 (16%) were varied, and 14,158 (37%) were cancelled. In 2012-2013, there were a total of 39,156 reviews; 20,046 (51%) were upheld; 5,932 (15%) were varied; and 13,178 (34%) were cancelled. In 2011-2012, there were a total of 56,228 reviews; 54% were upheld; 12% were varied; and 34% were cancelled. In 2010-2011, there were a total of 46,043 reviews; 17,355 (38%) were upheld; 4,502 (10%) were varied; and 20,424 (44%) were cancelled. In 2009-2010, there were a total of 25,348 reviews; 12,576 (50%) were upheld; 1,319 (5%) were varied; and 11,375 (45%) were cancelled.

If nothing else, these figures demonstrate that in a complex tax system where application of laws to an infinite number of fact scenarios will provoke innumerable disputes. The cost of running the tax tribunal might simply be one which the government ought to bear for having introduced legislation the implementation of which is far from straightforward.

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About taxatlincolnox

Tax PhD candidate, College Lecturer and Tutor at Oxford University; Researcher at King's College London and Social Sciences Tutor with the Brilliant Club. With this blog, I seek merely to contribute to the debate. All thoughts are mine, of course.
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