DMBM523690 - Debt and return pursuit: PAYE: penalties for late payment: penalty appeals: tribunal hearings

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Full guidance on the first-tier and upper tribunals is available at ARTG8000. It is important that all tribunal caseworkers familiarise themselves with the content of this guidance.

Tribunal categories

On receipt of a tribunal application the HM Courts & Tribunal Service (HMCTS) will allocate the case to one of the following categories.

  • Default paper - a judge reads written statements from both parties and makes a decision based on these alone. No oral hearing is held.
  • Basic - an oral hearing is held where both parties present their case before the judge.
  • Standard or complex - a more formal oral hearing is held and all parties have longer to prepare their case. A statement of case is sent to the tribunal and the appellant prior to the hearing.

The category allocated is entirely at the discretion of the HMCTS and usually depends on the complexity of the case. Most PAYE Late-Payment Penalty (PLPP) cases are dealt with as basic, however, some more complicated/large cases may be categorised as standard.

In addition, the appellant may request that a case initially categorised as basic is dealt with as default paper (for example, if they are unable to attend an oral hearing in person).

This guidance covers these three categories only (see ARTG8390 for information on complex cases).

Postal arrangements between HMCTS and HMRC

In most cases, the first time you will be made aware of a tribunal application is on receipt of the tribunal application form which is sent to HMRC from the HMCTS by email.

Initial receipt and the subsequent distribution of post from the HMCTS is the responsibility of a central team known as the ‘HMRC Clearing House’. Correspondence from HMCTS is received into the Clearing House who then distribute across HMRC through a series of dedicated mailboxes.

DMB’s mailbox is ‘Appeals, 11 (DMB Debt Mgnt Appeals), TRP (DMB Debt Mgmt)’.

Within 48 hours of receiving a PLPP tribunal application, Clearing House action as follows:

  • Default paper - The default paper process is handled entirely within DMB, therefore Clearing House send the tribunal application form to the Appeals 11 mailbox only.
  • Basic and standard - Case handling for these categories is split between DMB and Local Compliance, therefore, to ensure that both areas are made aware of new cases simultaneously, Clearing House will send the tribunal application to:
  • Appeals 1 (Local Compliance (LC)) to allocate a LC tribunal caseworker to present the case at the hearing and let Appeals 11 know
  • Appeals 11 (Debt Management & Banking (DMB)) to allocate a DMB tribunal caseworker who will be responsible for reviewing the case and preparing the statement of case/ evidence bundle for the Local Compliance (LC) caseworker.

Within 48 hours of receiving the tribunal application form from Clearing House, Appeals 11 will forward it to the PLPP raising office. The office should then update the tribunal case spreadsheet with details of the:

  • employer name
  • tribunal case reference
  • PAYE reference
  • company postcode (this dictates which Local Compliance area will handle the case)
  • if known, the hearing date and location (basic cases only).

All other post (for example, hearing dates, correspondence from the employer, decisions and so on) received from the Tribunal Service is dealt with in the same way.

Dealing with tribunal applications

The table below provides guidance on how to action each type of tribunal application category. It is important to note that contact with the employer does not need to end when an appeal is with the tribunal. Even close to the hearing it may still be appropriate to settle the case by agreement. For example, additional information supplied may lead you to accept that they had a reasonable excuse.

'Default paper' tribunal

Because there is no hearing in default paper cases, the process is contained entirely within DMB.

DMB tribunal caseworker’s actions

On receipt of the application you have 42 calendar days from the date of the HMCTS letter of acknowledgement to the employer to prepare and issue a Statement of Case/evidence bundle. You should:

  • review all aspects of the case including our previous handling of the initial appeal and Internal Review (if one has taken place) and any additional information supplied by the employer (use ‘Appendix A Case Review - Points to consider’ at DMBM523695 where appropriate)
  • consider HMRC’s position, and in particular, how a judge is likely to view the case
  • complete a statement of case making sure all of the employer’s points have been answered
  • prepare the evidence bundle include:
  • legislation
  • copies of any tribunal decisions you have quoted supporting your case
  • if required, obtain technical advice(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • prepare final draft and submit to manager for review and sign off
  • follow guidance at ARTG8535 and send a copy of the bundle to the Tribunal Service
  • send a copy of the bundle to the employer
  • update the tribunal case spreadsheet
  • BF case 45 calendar days.

Appeals 11 will forward a copy of the statement of case to HMCTS. On receipt, HMCTS will write to the employer informing them they have 30 calendar days from the date HMRC sent them the statement of case to respond or request an oral hearing. The employer should copy any response to HMRC.

Neither HMRC nor the employer can send any further evidence or arguments after this point, unless the tribunal gives them permission to do so. The tribunal will use the statements of both sides to decide the case. See ARTG8450 for information on what to do if the employer provides additional information before the hearing.

'Basic' tribunal

In basic cases, an oral hearing is held. Both parties present their case before a judge who will decide the outcome after considering the arguments (see Tribunal decisions).

The preparatory work for Basic cases is split into two distinct parts, each completed by a different area of HMRC:

  • full case review and preparation of evidence bundle completed by the DMB tribunal caseworker
  • evidence bundle review and legislative bundle preparation completed by Local Compliance.

To ensure that each area has sufficient time to complete their part of the process the DMB tribunal caseworker will, where possible, submit the papers to their LC counterpart no later than 21 calendar days before the hearing date.

DMB tribunal caseworker actions

On receipt of the application you should:

  • review all aspects of the case, including our previous handling of the initial appeal and Internal Review (if one has taken place) and any additional information supplied by the employer (use ‘Appendix A Case Review - Points to consider’ at DMBM523695 where appropriate)
  • consider HMRC’s position in-depth and how the judge will view the case
  • complete an evidence bundle incorporating a case summary and any supporting evidence (for example, BROCS payment screens, IDMS call reports and so on); make sure all of the employer’s arguments have been answered
  • if required, obtain technical advice(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • prepare final drafts and submit to manager for review
  • obtain manager’s sign off for evidence bundle
  • no later than 21 calendar days before the hearing send the papers by track and trace to the Local Compliance caseworker and email them the summary of case, the bundle contents page and the hearing notification.
  • BF case for four weeks after the hearing date.

The Local Compliance caseworker will add their legislative bundle to your evidence bundle and prepare for the hearing. They may approach you for additional information or to seek clarification on the information sent at any point prior to the hearing.

The Local Compliance caseworker will return the papers to the DMB tribunal caseworker after the hearing.

Hearing dates

In most cases, you will receive the tribunal application first, shortly followed by the hearing notice containing the date and location of the hearing. As soon as this information is known the tribunal case spreadsheet should be updated as cases need to be prioritised by hearing date. Those with the nearest hearing date should be worked first.

Note: Once the hearing date is known add it to the email header as this helps to prioritise deadlines.

Short hearing dates

Although HMCTS usually allow at least four to six weeks for the hearing date, the minimum they can set the date is 14 calendar days from the date of the hearing notice. If you receive a case with a short deadline, please let your line manager know immediately so that they can liaise with Local Compliance and agree an action plan.

'Standard' tribunal

In Standard cases, you will not receive a hearing date. Instead, HMRC must provide the employer with a written Statement of Case within 60 calendar days of HMCTS’s acknowledgement letter to the employer. The employer then has 42 calendar days to provide a list of documents to both the HMCTS and to HMRC.

Once all of this information has been provided HMCTS will set a hearing date. As with basic cases the preparatory work is split into two distinct parts, each completed by a different HMRC area:

  • full case review and preparation of evidence bundle completed by DMB tribunal caseworker
  • evidence bundle review and legislative bundle preparation - completed by Local Compliance caseworker.

In standard cases, all papers are submitted to HMCTS prior to the hearing so the judge is aware of the background to the case prior to the hearing.

The tribunal may make specific requests in these cases, known as directions.

To ensure that each area has sufficient time to complete their part of the process the DMB tribunal caseworker will, where possible, submit the papers to their Local Compliance counterpart within 30 calendar days of HMCTS’s acknowledgement letter to the employer.

DMB tribunal caseworker actions

On receipt of the case you should:

  • review all aspects of the case including our previous handling of the initial appeal and internal review (if one has taken place) and any additional information supplied by the employer (use ‘Appendix A Case Review - Points to consider’ at DMBM523695 where appropriate)
  • consider HMRC’s position in-depth and how the judge will view the case
  • complete an evidence bundle incorporating a case summary and any supporting evidence (for example, BROCS/ETMP payment screens, IDMS call reports and so on); make sure all of the employer’s arguments have been answered
  • if required, obtain technical advice(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • prepare final drafts and submit to manager for review
  • obtain manager’s sign off for evidence bundle
  • no later than 30 calendar days from date of Tribunal Service’s acknowledgement to the employer send the papers by track and trace to the LC caseworker and send them via email the statement of case and the hearing notice
  • confirm by email to Appeals 11
  • BF case for 4 weeks after the hearing date.

The Local Compliance caseworker will use the information provided to prepare for the hearing and issue a Statement of Case to the employer. They may request additional information from DMB at any time prior to the hearing.

The Local Compliance caseworker will return the papers to the DMB caseworker after the hearing.

Important: If you are in danger of missing the 30-day deadline for submitting the papers to Local Compliance, please let your line manager know so they can liaise with Local Compliance and agree an action plan.

Presence of a DMB witness at oral hearings

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

What happens at the tribunal hearing

PLPP cases are presented at the oral hearing by the Local Compliance caseworker and not a DMB caseworker. This guidance does not therefore go into detail about the procedures and processes that are followed at the hearing itself, however, you can find this information at ARTG8600.

Requesting a stay (postponement)

Requesting a stay (postponement) in a tribunal case should only be done in exceptional circumstances. If you believe that a case needs to be stayed:

  • obtain agreement from your manager
  • email Appeals 11 explaining HMRC want to request a stay and providing reasons
  • BF the case awaiting HMCTS response.

Tribunal decisions

In oral hearings, the decision may be given on the day or it may be given in writing at a later date. Whether there has been an oral hearing or not, the tribunal will send all parties a decision note within 28 calendar days of making the decision or as soon as possible after that. If the decision note does not include full written reasons for the decision then any party can request full written reasons but they must do so within 28 calendar days of the decision note. The tribunal must then send full written reasons within 28 calendar days of receiving that application. For more detail, see ARTG8910.

For PLPP cases, the decision notice will initially be sent from HMCTS to the Clearing House (see Postal arrangements between HMCTS and HMRC). Clearing House will then forward it to DMB’s Appeals 11 mailbox and Local Compliance's Appeals 1 mailbox. The manager of Appeals 11 mailbox also updates HMRC’s national database with the decision.

The decision of the tribunal is final unless either the employer or HMRC asks:

  • for permission to appeal to the Upper Tier (which they can only do on a point of law) or
  • the tribunal to set aside its decision.

DMB action on receipt of the decision notice

Do not take any action on the case until the official decision notice has been received from the tribunal. On receipt of the notice, you must write to the employer to give effect to the decision - see ARTG8950. You should action the case according to the guidance below.

Appeal dismissed

Tribunal finds in favour of HMRC and the penalty stands.

  • Issue letter FPI250 (Tribunal outcome-appeal dismissed) to employer.
  • BF 70 calendar days to allow time (56 calendar days) for the employer to request permission to appeal the decision.

After the 70 day BF has expired:

  • release stand over in ETMP
  • file papers
  • refer for normal recovery action.

Appeal allowed

Tribunal find in favour of employer and will recommend a course of action.

  • Issue letter FPI240 (Tribunal outcome-appeal allowed) to employer.
  • Cancel or amend the penalty according to tribunal instructions.

Where part of the penalty is penalty still due-after a 70 day BF has expired:

  • release stand over in ETMP
  • file papers
  • refer for normal recovery action.

If no amount is payable, close the IDMS work item (see DMBM523675).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Appeal allowed in part

Tribunal find part in favour of employer and will recommend a course of action.

  • Issue revised calculation with letter FPI260 (Tribunal outcome-appeal allowed in part).
  • Amend the penalty according to tribunal instructions.

After a 70 day BF has expired:

  • release the stand-over in ETMP
  • file papers
  • refer for normal recovery action.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Appeal struck out

An appeal can be struck out if the tribunal does not believe it has jurisdiction in relation to all or part of the case - see ARTG8340.

Withdrawal of case or case settled by agreement

Withdrawn because case is settled by agreement

An appeal can be withdrawn where it is settled by agreement prior to the hearing. This may happen, for example, if new information about the appellant’s circumstances come to light that mean a reasonable excuse existed.

Withdrawn for other reasons

Alternatively, HMRC or the appellant may decide to withdraw their appeal for other reasons. For example, having read HMRC’s bundle of evidence the appellant may decide HMRC’s case is strong and tribunal action is not worth further pursuit.

Either HMRC or the employer can withdraw the case at anytime before or during a hearing, see ARTG8460.

Decision set aside

If either the employer or HMRC wants to ask the tribunal to set aside its decision, or part of its decision, they must write to the tribunal so that their request is received within 28 calendar days of the date the First-tier Tribunal sent its notice of decision to the party, or within one month of the date the Upper Tribunal sent its notice of decision to the party.

The tribunal may agree to set aside the decision if it thinks it is in the interests of justice to do so, see ARTG8970 for full details.

Right of appeal against the tribunal decision

Either the appellant (employer) or respondent (HMRC) can ask the tribunal for permission to appeal against a decision on a point of law. Any application for permission to appeal must be made within 56 calendar days of either:

  • full written reasons for its decision, see ARTG8910
  • notification of amended reasons for, or correction of, the decision following a review, see ARTG9010
  • notification that an application for the decision to be set aside has been unsuccessful, see ARTG8970.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

For more information, see:

ARTG8990 - where HMRC does not accept tribunal decision

ARTG9000 - where the employer does not accept tribunal decision

ARTG9010 - where tribunal reviews its decision

ARTG9020 - for information on the Upper Tribunal/ appellate court

Costs

In rare cases, the judge may award costs against HMRC, for example, to compensate the appellant for loss of earnings in attending the hearing. In some cases, Local Compliance will agree to pay costs but where DMB have to pay costs, you should complete the IPC Payment Request Form (blue boxes are for caseworker completion):

  • in the GL account code box put ‘520722000’
  • in line details put ‘Tribunal costs’ and the Tribunal reference
  • payee name and address is the appellant’s details
  • reason for payment ‘Tribunal costs’.
  • Send to HO manager for signature.
  • HO manager should send to the SO authorising officer for final authorisation.
  • Authorising Officer will send form with email authorisation to IPC, Worthing (HRL CSS Financial Services).