Billions of pounds of disputes are resolved through cases originating in tax tribunals. This is likely to increase given the noises being made by HM Revenue & Customs (HMRC) in its new litigation strategy about forcing more tax disputes into litigation where before they might have preferred resolution by negotiation. The tax tribunals are being dragged into the 21st century as part of the Ministry of Justice’s (MoJ’s) creation of the unified tribunal system to consolidate the tribunal system in general, and these reforms should make the tax tribunals better equipped to deal with this increasing caseload. Other aspects, however, will be greeted with less enthusiasm – not least the proposal that the winner should not be able to recover costs from the loser.
Currently, complex direct tax (broadly, corporation, income and capital gains tax) cases are heard by the special commissioners, while indirect taxes are heard by the VAT and duties tribunal. From April 2009, their respective jurisdictions will be transferred to the new tribunal, which comprises the first-tier tribunal and upper tribunal. They will combine to form the tax chamber, one of five ‘chambers’ of the first-tier tribunal (the others being social entitlement; general regulatory; health education and social care; and land property and housing). The upper tribunal will be divided into three chambers: administrative appeals; finance and tax; and land. Each will have its own chamber president, reporting to the senior president, Lord Justice Carnwath, the head of the tribunal judiciary (who has sat in a number of leading tax cases, including the seminal tax avoidance case MacNiven v Westmoreland Investments). The president of the tax chamber is yet to be appointed.
