HMRC Disputes And Assessments

Have you received an HMRC assessment claiming you owe unpaid tax?

Are you wondering whether you have to pay it, or whether you can challenge it?

An HMRC assessment is serious. You typically have just 30 days to respond. If you don’t respond properly or within this strict deadline, HMRC will assume you accept their claim. They’ll pursue you for payment, and if you don’t pay, they’ll take enforcement action.

This page explains what an HMRC assessments is, why they’re issued, what happens if you don’t respond, and how the review and appeals process works.

What is an HMRC assessment?

An HMRC assessment is a formal notification of sums HMRC believes you owe them.

The assessment should set out what the claim is for, under what area it’s claimed, and how you can appeal. Assessments can be issued for several reasons, typically where HMRC suspects that funds due to the Crown have not been paid.

The key word is “believes”. An assessment is HMRC’s estimate of what you owe. They may be right. They may be wrong. They may be partially right. Until you respond and challenge it, HMRC will assume their estimate is correct.

An assessment is not a penalty

It’s important to understand that an assessment is not the same thing as a penalty.

An assessment is HMRC’s claim that you owe them tax that should have been paid but wasn’t. It’s a demand for the underlying tax liability.

A penalty is an additional charge imposed on top of the tax liability for specific wrongdoing, such as submitting an inaccurate return, failing to notify HMRC of a liability, or deliberately evading tax.

You can receive an assessment without a penalty. You can also receive both an assessment and a penalty at the same time. The two are separate, although they often arise from the same circumstances.

Why do HMRC issue assessments?

Any loss of revenue to the Crown is high on HMRC’s list of priorities. HMRC have stepped up their approach and are now significantly more aggressive and active in their pursuit of liabilities, driven by political pressure and increased staffing levels.

Assessments arise where HMRC suspects that funds due to the Crown have not been paid. This can result in the issue of an assessment, a wrongdoing penalty, or both.

Types of assessments

HMRC can issue assessments for various types of tax.

VAT assessments are issued where HMRC believes that VAT sums are due to the Crown but have not been paid. This might be because you’ve under-declared VAT on sales, over-claimed input VAT on purchases, or failed to register for VAT when required.

Excise assessments can be issued where HMRC believes that excise duty (on alcohol, tobacco, fuel, etc.) is due but has not been paid.

Personal and corporate tax assessments may be issued for non-payment of Income Tax, Corporation Tax, Capital Gains Tax, or other direct taxes. HMRC might issue these if they believe you’ve under-declared income, claimed excessive deductions, or failed to submit returns.

In all cases, the assessment will specify the tax type, the amount HMRC claim is due, and the period it relates to.

For a confidential free discussion, call us today on 01908 414990. Alternatively, email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

Responding before an HMRC Assessment is issued

HMRC will usually advise you of their intention to issue an assessment before they actually issue it. They’ll set out their reasons and ask for information or comments from you to support your position.

This is your opportunity to prevent the assessment being raised in the first place.

If you can provide evidence or explanations that satisfy HMRC, they may decide not to issue the assessment at all. But be careful. Whatever you say to HMRC at this stage could come back to bite you later.

That’s why we urge you to seek expert legal advice straight away. Even if it’s just a warning letter, we can help prevent the matter from escalating. We’ve seen cases where a poorly worded response has made things significantly worse.

Why you need a solicitor, not just an accountant

We hear this from clients all the time:

“My accountant said they could handle the review.”

“My accountant has already written to HMRC twice and nothing’s happened.”

“My accountant told me there’s nothing I can do and I should just pay it.”

Look, your accountant is excellent at what they do. Producing tax returns, calculating your liabilities, managing your VAT records: these are all accounting activities.

But when you’re challenging an HMRC assessment or preparing for a statutory review or tribunal appeal, you’re entering the legal realm. You need someone who understands the legislation, the case law, the legal tests the tribunal will apply, and how to construct legal arguments that will stand up to scrutiny.

The two critical advantages lawyers have:

1. Legal expertise and dispute experience

As specialist tax dispute solicitors, we argue with HMRC day in, day out. We know how to present evidence, how to construct legal arguments, and how to navigate the complex web of tax legislation and precedent.

All we do is argue. For us, being prepared to argue and defend against HMRC is what we expect to do. Many accountants don’t expect to have to argue. They’ll write a letter to HMRC. We fight.

2. Legal privilege and confidentiality

When you instruct a lawyer, the advice we give you is legally privileged. It remains confidential and you don’t have to disclose it to HMRC if you appeal to the Tax Tribunal.

By contrast, advice from an accountant can be disclosed.

Instructing a lawyer gives you a strategic advantage. You can discuss the weaknesses in your case, explore different arguments, and plan your approach without worrying that HMRC will see your thinking.

Can we work with your accountant?

Absolutely. In many cases, the best approach is a collaborative one where we work together.

You remain in control of how those conversations happen. We can be authorised to speak directly with your accountant and liaise with them, copy your accountant in on emails and communications, or work independently and simply update you and your accountant as needed.

The key is getting the right expertise involved at the right time. Your accountant knows your business and your finances. We know tax litigation and dispute resolution. Together, that’s a powerful combination.

What happens if you don’t respond to an assessment?

If the assessment is not disputed by you, HMRC will deem that the sums are accepted as due by you and will pursue you for payment.

HMRC may also issue wrongdoing penalties on top of the assessment. In certain circumstances, HMRC can only issue a wrongdoing penalty once an assessment has been issued, which is another reason to seek legal advice as soon as you receive any correspondence regarding an assessment.

HMRC’s enforcement powers

If you don’t pay, HMRC won’t simply send you reminder letters and hope you’ll eventually settle up. They have extensive enforcement powers.

HMRC may visit you at your home or business address to discuss settlement. They carry card payment machines and can take payment from you on the spot.

If you continue not to pay, HMRC can pass your debt to a debt enforcement team or use a debt collection agency. They can apply to the court for an order allowing them to take money directly from your bank account. They can apply for a charging order over your property.

For businesses, HMRC can apply to wind up your company. For individuals, HMRC can apply for bankruptcy proceedings.

All of this can be avoided by responding to the assessment properly and on time.

The review process

Once an assessment is formally raised, you can request a review of the decision.

The matter will be considered by an alternative HMRC officer who has not been involved in the original issuing of the assessment. That officer will consider the matter in full before providing their review decision to you.

Be aware that the time frame to request a review is strict. For most assessments, you have 30 days from the date of the assessment to request a review or appeal directly to the Tax Tribunal.

This 30-day deadline is critical. Miss it, and HMRC will assume you accept their decision. Your options narrow dramatically.

What a review involves

A statutory review is carried out impartially by a review officer who works in HMRC’s Solicitor’s Office and Legal Services directorate.

The review officer wasn’t involved in the original decision. They’ll look at all the evidence and correspondence, consider your grounds for challenging the assessment, and decide whether the original HMRC officer made the right decision based on the information available to them.

This is your best opportunity to get HMRC to change their mind. If you can put compelling evidence and legal arguments in front of the review officer, you have a real chance of getting the assessment reduced or withdrawn.

But here’s the thing: most people (and most accountants) waste this opportunity. They submit a review request without putting forward any new arguments or evidence. They simply ask for another officer to look at it. So it’s no surprise when the review comes back upholding the original decision.

As specialist tax dispute solicitors, we know what works. We know how to structure legal arguments. We know what evidence HMRC will find persuasive. We know how to give you the best possible chance at this critical stage.

For a confidential free discussion, call us today on 01908 414990. Alternatively, email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

Appealing to the Tax Tribunal

If you still dispute the outcome once the review decision has been issued, you can appeal the review decision to the Tax Tribunal.

The Tax Tribunal is similar to a court, but the procedure is slightly less formal.

Any appeal to the Tax Tribunal must be made within 30 days of the date of the written review decision issued to you. Again, this is a strict deadline. Miss it, and you’ll need to apply for permission to appeal out of time, which is difficult.

Can you skip the review and go straight to tribunal?

In certain circumstances, yes. For indirect taxes (such as VAT, excise duty, customs duty), you can usually appeal straight to the tribunal if you wish, or you can request an HMRC review first.

For direct taxes (Income Tax, Corporation Tax, Capital Gains Tax, PAYE, National Insurance contributions), you must appeal to HMRC first and go through the review process before you can take your case to the Tax Tribunal.

The costs and time frame may well affect your decision on how to proceed. That’s why it’s important to seek legal advice as soon as possible.

Why the tribunal is harder than you think

Many people think that if HMRC upholds their decision at review, they can just take the case to the Tax Tribunal and get a fair hearing.

That’s true to an extent. The tribunal is independent. But what many people don’t understand is the legal test the tribunal will apply.

The tribunal doesn’t simply decide whether HMRC got it right or wrong. The tribunal decides whether HMRC’s officers made a reasonable decision based on the evidence before them at the time.

The tribunal could even agree with you and still uphold HMRC’s original decision if the officers acted reasonably given what they knew.

This is why the review stage is so critical. If you waste your opportunity there by not putting forward the right evidence and legal arguments, you make winning at tribunal exponentially harder.

You may have to pay the assessment before the tribunal will hear your case

There’s another major hurdle that catches many people off guard: payment requirements.

For indirect tax assessments (such as VAT, excise duty, and customs duty), you typically have to pay the full amount of the assessment to HMRC before the Tax Tribunal will accept your referral. That’s right: you have to pay what HMRC claims you owe before you can even challenge it at tribunal.

And it gets worse. If HMRC is successful at tribunal, they can also charge interest on that sum and will bill you for it afterwards.

For direct tax assessments (such as Income Tax, Corporation Tax, Capital Gains Tax) and penalties, payment in advance is not required. You can pursue your tribunal appeal without having to pay first.

This distinction is crucial. If you’re facing an indirect tax assessment and you don’t have the funds to pay it up front, your ability to appeal to the tribunal is severely limited. You may be able to apply for hardship relief to postpone payment, but these applications are difficult and require compelling evidence.

This is yet another reason why the review stage is so important. It’s your chance to resolve the dispute without needing to pay first and without the formality, cost, and complexity of tribunal proceedings.

For a confidential free discussion, call us today on 01908 414990. Alternatively, email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

How Altion Law can help with HMRC assessments and disputes

We understand that there’s often a history to an HMRC assessment. These matters rarely come out of nowhere. There’s usually been some issue, some investigation, some dispute that’s been rumbling on for months or even years.

We offer an initial fixed-price consultation to discuss how complex your issue is and how to proceed. This is important because there are often short deadlines, and a period where additional information will need to be obtained to challenge HMRC effectively.

We’re used to working alongside company accountants or external accountancy firms. We don’t replace your accountant. We complement them.

What we advise on

As specialists in HMRC assessments and disputes, we can advise whether:

• You are even the correct party for HMRC to pursue (sometimes HMRC target the wrong entity or individual)
• There are any additional risks, such as further assessments or penalties against company directors personally
• There are any defences available to you
• The assessment has been issued correctly and within the relevant time limits
• HMRC’s calculations are accurate
• You should request a statutory review or appeal directly to the Tax Tribunal
• There are grounds for applying for hardship relief if payment before appeal would cause you hardship

Our approach to HMRC assessments

We start by assessing the strength of your case. We’ll review all the correspondence, examine the legal position, and give you honest, practical advice on your prospects.

If your case is strong, we can proceed with requesting a statutory review, preparing and submitting comprehensive grounds for review with supporting evidence, liaising with HMRC throughout the process, and representing you at the Tax Tribunal if needed.

Where it may be harder to successfully challenge the assessment, we advise on other options, including payment arrangements, hardship applications, time to pay agreements, and penalty reduction strategies.

We manage the entire process from start to finish. We’ll handle all correspondence with HMRC, ensure all deadlines are met, gather and present the necessary evidence, and keep you informed at every stage.

 

“Professional and honest service who certainly know their business. Kept informed all of the time and it was smooth successful process.”

– Private Client

 

Don’t let the deadline pass

If you’ve received an HMRC assessment, or if HMRC have written to you advising of their intention to issue an assessment, time is not on your side.

The 30-day deadline is strict. Miss it, and your options narrow significantly.

Even if you think your accountant can handle it, even if you’re tempted to wait and see what happens, even if you’re hoping the problem will go away, you need to act now.

We strongly recommend that you seek legal advice as soon as you receive any correspondence regarding an assessment or penalty from HMRC, even if it’s just a warning. Early action can prevent the matter from escalating.

For a confidential free discussion, call us today on 01908 414990. Alternatively, email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.