Tax Collection and Management (Wales) Act 2016 reviews and appeals: Technical guidance

The guidance sets out which WRA decisions are reviewable and appealable and taxpayers’ rights to request a WRA review or appeal to the tribunal against an appealable decision. It also sets out the arrangements for carrying out WRA reviews and resolving disputes.

Our approach to tax disputes sets out how we will manage disputes with taxpayers.

A dispute arises where a taxpayer disagrees with a WRA decision. And intends to challenge it using their statutory rights to a review or appeal to the tribunal.

The objectives of our strategy 

At the heart of our approach there are 5 key objectives: 

1. Ensure the fairness of the Welsh tax system. 
2. Ensure the right amount of tax is paid.
3. Resolve disputes in a cost-effective way. 
4. Protect and test the legislation. 
5. Influence customer behaviour. 

How we’ll deliver these objectives 

We want to minimise the risk of a dispute arising in the first instance. This means that our dispute strategy doesn’t begin when we issue an appealable decision. It begins at the start of a taxpayers’ interaction with us.

We will minimise the risk of a dispute arising by:

• tailoring our approach to taxpayers
• maximising opportunities to communicate with taxpayers clearly and in their preferred language
• communicating throughout our engagement with a taxpayer
• explaining our decisions clearly and in full

Sometimes, the taxpayer will choose to disagree with a decision and seek to challenge it. We will act quickly to resolve the dispute:

• we will agree with a taxpayer what is not in dispute (such as facts or interpretation of the law)
• we will continue to communicate throughout the dispute

Wherever possible we will settle cases by agreement. But we need to recognise this isn’t always possible. There will be times where we need to litigate to protect our position.

Once a dispute has closed, we will learn from it.

What this means for taxpayers

• We’ll invest more time up front to prevent disputes.
• We’ll seek to settle issues by agreement wherever possible.
• We’ll never “split the difference”.
• We’ll treat each individual issue on its merits. So, we won’t decide not to pursue one dispute if a taxpayer settles another.
• We might litigate a dispute, even where there is a small amount of tax at stake.
• We’ll take a hard line on evasion/ avoidance. We’ll reach agreement wherever possible but will not shy away from litigation to ensure Welsh taxes are applied in the way intended by the Welsh Parliament.
• We’ll consider alternative dispute resolution to settle disputes where appropriate and cost-effective.

Appealable decisions are those where the taxpayer may request a review of the decision or appeal against the decision. The following WRA decisions listed at section 172(2) TCMA are reviewable and appealable:

• a decision which affects whether a person is chargeable to a devolved tax
• a decision which affects the amount of a devolved tax to which a person is chargeable
• a decision which affects the day by which an amount of a devolved tax must be paid
• a decision about a penalty relating to a devolved tax
• a decision to issue an information notice or to include a particular requirement in such a notice
• a decision to issue a notice under paragraph 14 of Schedule 15 to LTTA (recovery of group relief: notice requiring payment by another group company or controlling director)
• a decision to issue a notice under paragraph 9 of Schedule 16 to that Act (recovery of reconstruction or acquisition relief: notice requiring payment by another group company or controlling director);
• a decision relating to the method to be used by the operator of an authorised landfill site to determine the weight of material for the purposes of landfill disposals tax
• a decision relating to the registration of a person for the purposes of landfill disposals tax
• a decision relating to the designation of a non-disposal area for the purposes of landfill disposals tax
• a decision relating to the designation of a group of bodies corporate for the purposes of landfill disposals tax.

A taxpayer may request a review or appeal against a decision to issue an information notice, or any requirement such a notice, only in the following circumstances:

• if it is an unreasonable expectation that they are able to comply with the notice
• if any of the exemptions set out in sections 97 to 102 TCMA applies, for example, if the notice relates to protected information or if the information is not in the person’s power or possession, or
• if Condition 4 is not met in relation to a notice to obtain information about a debtor (sections 92 or 93 TCMA).

Condition 4 requires the person holding the information to have obtained the debtor’s details in the course of carrying on a business.

If a tribunal has approved the issuing of an information notice, the taxpayer may not request a review of the WRA’s decision to issue the notice.

The following WRA decisions are neither reviewable nor appealable:

• a decision to issue a notice of enquiry under section 43 TCMA into a tax return or an amendment to a tax return
• a decision to issue a notice of enquiry under section 74 TCMA into a claim or an amendment to a claim made by a person (see TCMA/2050)
• a decision to issue certain information notices: a taxpayer notice (section 86 TCMA) or a third party notice in relation to subsidiary undertakings (section 90(3) TCMA, and
• a decision to include a particular requirement in a taxpayer notice or third party notice in relation to subsidiary undertakings.

A taxpayer may request a review into an appealable decision set out above. However, a review cannot be requested:

• for a decision to amend a self-assessed tax return while an enquiry is in progress and the enquiry has not been completed
• where an appeal against the decision has been made to the tribunal and the appeal has not been withdrawn, or the tribunal has already determined that matter, or
• where the taxpayer has entered into a settlement agreement with the WRA, unless they have withdrawn from the agreement.

The taxpayer must request a review by notifying the WRA (a ‘notice of request’), and specifying the grounds for review, within 30 days of the date on which the appealable decision is issued by the WRA.

If the taxpayer had entered a settlement agreement with the WRA but subsequently withdrew from the agreement, the notice of request must be given to the WRA within 30 days of the date of withdrawal.

If the request relates to a WRA decision to amend a person’s tax return while an enquiry is in process, the WRA must receive the notice of request within 30 days of the date the WRA notified the taxpayer that the enquiry was complete.

The WRA will consider a late request for a review if it is satisfied that:

• the taxpayer had a reasonable excuse for not giving a notice of request  to the WRA  within the time limit, and
• the taxpayer made the request without unreasonable delay after the reasonable excuse ceased to apply.

The WRA will write to the person requesting the review to confirm whether or not it will review the decision.

If the WRA does not agree to review the decision, the taxpayer can apply to the tribunal for permission for their request. The application must include the reason why the notice of request was not provided in time. The tribunal will only direct the WRA to complete the review if there was a reasonable excuse for the request being late, if the subsequent request was made without unreasonable delay, and if the appeal to the tribunal was also made without unreasonable delay.

If the tribunal accepts the appeal and directs the WRA to undertake a review, the WRA must carry out the review.

When carrying out a review, the WRA must consider the steps it had taken to make the decision and any subsequent action taken by any person in seeking to resolve the disagreement about the matter in question. The review will be carried out by a member of WRA staff who has not previously been involved in the matter. During the review, the WRA may want to contact the taxpayer to verify or clarify information as part of the review process.

The WRA must ensure it has a reasonable opportunity to consider any representations made by the person requesting the review.

In concluding the review, the WRA can affirm, vary or cancel the original decision which was under review.

The outcome of the review must be communicated to the person who requested it within 45 days of the WRA receiving the notice of request. It is possible to change the time period on the condition that the WRA and the person requesting the review both agree to the revised timing.

Where the tribunal has directed the WRA to carry out a review, the WRA must notify the person within 45 days of receiving the tribunal’s direction. This time period can be changed if the WRA and the person both agree.

If the WRA does not notify the person within 45 days, the review will be deemed to have concluded that the WRA’s decision is to be upheld. The WRA must notify the person who issued the notice of request that this is the outcome of the review.

The conclusions of a review are treated as if the tribunal had determined an appeal against the WRA decision.

However, the conclusions of the review are disapplied if the WRA and the person requesting the review enter into a settlement agreement in relation to the matter subject to the review, or if the matter is subsequently determined through an appeal to the tribunal.

The conclusions of the review are not to be treated as if determined by a tribunal for the purposes of sections 9 and 10 (Review of decisions of First-tier and Upper Tribunals), 11 (Right to appeal to Upper Tribunal), 12 (Proceedings on appeal to Upper Tribunal) and 13 (Right to appeal to Court of Appeal etc) of the Tribunals, Courts and Enforcement Act 2007.

A taxpayer may make an appeal to the tribunal against an appealable decision as set out in TCMA/5010. However, an appeal cannot be made:

• against a WRA decision to amend a person’s tax return while an enquiry is in progress and the enquiry has not been completed
• where a review by the WRA has been requested and the period in which the review must be completed has not yet ended, or
• where the person has entered into a settlement agreement with the WRA, and they have not withdrawn from the agreement.

If a person wishes to appeal an appealable decision, it must be made to the tribunal (a ‘notice of appeal’) within 30 days of the following:

• if the person has not requested a review, the date on which the WRA notified them of the appealable decision
• if the person has requested a review, the date on which the WRA notified them of the conclusions of the review
• if the person has entered into a settlement agreement with the WRA but has subsequently withdrawn from the agreement, the date of the withdrawal, or
• if it is in relation to a decision by the WRA to amend a person’s tax return while an enquiry is in progress, the date the person was notified that the enquiry was completed.

A person may make a late appeal against an appealable decision, with the permission of the tribunal. The tribunal will notify the person about its decision as to whether or not it gives its permission to permit the late notice of appeal.

When a person has given a notice of appeal the tribunal will determine the matter in question and may conclude that the decision is to be upheld, varied or cancelled.

If a person has requested a review into a decision or appealed against a decision, this does not affect any requirement on them to pay an amount of devolved tax (or, in the case of LDT, an amount of tax credit).

Postponement requests

If a person has requested a review or made an appeal against a WRA decision and they believe they have been charged an excessive amount of tax as a consequence of that decision, they may apply to the WRA for the recovery of the tax (and interest on that amount) to be postponed (‘a postponement request’).

This guidance summarises the key aspects of applying for a postponement request, but you may need to refer to the full legislative provisions at sections 181A-181J of the Tax Collection and Management (Wales) Act 2016 if this topic is relevant to you.

Time for making postponement requests

Where a postponement request relates to a decision where a review has been or is being requested, the request must be made within the time allowed for requesting a review (this is often within 30 days of a decision being made but see TCMA/5040 for more information), or, if a late request for a review is made, the postponement request must be made at the same time.

Where a postponement request relates to a decision where an appeal has been or is being sought, the request must be made within the time allowed for requesting a review (this is often within 30 days of a decision being made or within 30 days of a WRA review conclusion being issued but see TCMA/5090 for more information), or, if the tribunal gives permission for a late appeal, the postponement request must be made at the same time as permission is sought.

Late postponement requests may also be considered by WRA if the person applying has a reasonable excuse for failing to make the request within the required timeframe and subsequently made the request without unreasonable delay.

Information that a postponement request should contain

When a postponement request is sent to WRA it must give the following information:

• the amount of tax considered to be excessive
• the reasons for believing the amount is excessive

When a postponement request relates to LDT, it also needs to specify the reasons why recovery of the amount (including any interest) would cause the person making the application financial hardship.

WRA must issue a notice of its decision on a postponement request to the person who made the request.

Granting a postponement request

WRA has the power to grant a postponement request if satisfied that the person has reasonable grounds for thinking the amount of devolved tax is excessive. In the case of an LDT postponement request, WRA will also need to have reason to believe that recovery would cause financial hardship.

WRA may grant a postponement request for part of an amount. 

If approved, all or part of a postponement may be made conditional on the provision of additional security. 

If a postponement request is not granted 

If WRA does not grant a postponement request, this decision can be appealed to the Tribunal. The appeal must be made within 30 days of WRA issuing the decision. The Tribunal may affirm, cancel or replace WRA’s decision. 

Varying a postponement decision

After a postponement request has been granted it may be varied if there is a change in circumstances. This could involve changing the amount of tax postponed or conditions attached to the postponement. Either WRA or the taxpayer may request a variation and it must be agreed by both parties. If agreed, the WRA will issue a notice to the taxpayer of this decision. 

If agreement cannot be reached within 21 days of the request for a variation, the taxpayer or the WRA can apply to the Tribunal for a determination on the variation. The Tribunal can refuse or agree the variation or propose their own variation.

Recovery of tax during postponement period

Once a postponement request is granted, the WRA cannot seek to recover any postponed amount of tax during the postponement period. The postponement period will usually begin on the day on which the postponement request is made and end on the day on which the relevant review or appeal is concluded. 

There may be scope for further postponement requests if further appeals are made to the Tribunal. 

Payment of penalties in the event of a review or appeal

Where the WRA carries out a review into an amount of penalty that is disputed by a taxpayer and the review concludes that the taxpayer is liable, the taxpayer has to pay the penalty within 30 days of the date the notice informing them of the outcome of the review was issued.

If the taxpayer appeals against the decision, but subsequently withdraws the appeal, they must pay the penalty within 30 days of the date of the withdrawal.

If the result of the appeal is that the taxpayer is liable, they must pay the penalty within 30 days of the date that the appeal was determined.

Disposal of reviews and appeals in respect of information notices

Where a review concludes that an information notice will be upheld or varied, the notice recipient must comply with the information notice within a time period to be determined by the WRA.

If the tribunal upholds or varies an information notice, the notice recipient must comply with the notice within a time period set by either the tribunal or the WRA.

Suspension of repayments pending further appeal

If the tribunal determines that an amount of tax needs to be repaid to the taxpayer following an appeal, the WRA may request permission from the tribunal to postpone repayment of the amount until a further appeal is determined or the WRA is able to obtain security for the amount. The tribunal must agree to the request if it gives permission for a further appeal, or if it thinks the postponement is needed to protect the revenue.

If the tribunal does not agree to the WRA’s request for a further appeal, the WRA may make seek permissions to make a further appeal under sections 11(4)(b) (to the Upper Tribunal) or 13(4)(b) (to another appellate court) of the Tribunals, Courts and Enforcement Act 2007.Otherwise the decision of the tribunal is final.

The WRA and the taxpayer can enter into a settlement agreement, which can uphold, vary or cancel the original decision which is the subject of the review or appeal.

The effect or consequences of a settlement agreement are the same as if the tribunal had determined an appeal in relation to the matter in question by upholding, varying or cancelling the decision (whichever applies). However, a settlement agreement is not treated as a decision of the tribunal for the purposes of sections 9 and 10 (Review of decisions of First-tier and Upper Tribunals), 11 (Right to appeal to Upper Tribunal), 12 (Proceedings on appeal to Upper Tribunal) and 13 (Right to appeal to Court of Appeal of the Tribunals, Courts and Enforcement Act 2007.)

The above paragraph does not apply:

• where the taxpayer withdraws from the settlement agreement by notifying the WRA within 30 days from the day when they entered into the settlement agreement, or
• where the settlement agreement is not in writing, unless the fact that an agreement was entered into, and the terms agreed, are confirmed by a notice in writing from either the WRA to the taxpayer or the taxpayer to the WRA.

A settlement agreement may not be entered into in relation to an appealable decision, if an appeal has been finally determined.