Why HMRC Statutory Reviews can be a quicker and more cost-effective way to settle disputes

When a taxpayer disagrees with an HMRC appealable decision, most accountants – and even their clients – know that they have the option to take the matter to a tribunal.

However, there is far less awareness that such decisions can be reviewed by a different department at HMRC, at no cost, and much more quickly than via a tribunal.

These statutory reviews also have a high success rate, with 75% of cases being settled without going on to appeal to a tribunal.

Here Chris Gargan, HMRC Assistant Director, National Reviews Team, explains why accountants might want to recommend their clients consider a statutory review rather than a tribunal appeal, at least in the first instance.

For various reasons, statutory reviews are usually preferable to embarking on a tax tribunal appeal. The key benefits are that they are a quick, easy and cost-effective way to settle a dispute, avoiding unnecessary litigation, cost and stress, whilst customers retain the right to appeal to a tribunal if they disagree with a review conclusion.

How statutory reviews work

The purpose of the review is to look at the decision again, not to assess new facts or evidence that haven’t been considered by the caseworker. However, the review officer will give customers the opportunity to send in further information during the review period.

The review officer will then decide if the appealable decision is

  • legally and technically correct
  • consistent with HMRC’s policy, and
  • consistent with HMRC’s Litigation and Settlement Strategy.

Some disputes involving a direct challenge on HMRC’s interpretation of legislation may need to be determined by the courts, since a review officer cannot override HMRC policy. However, even in these cases a review can often help clarify facts and both party’s understanding of the dispute.

Process and timing

The statutory time limit for reviews is 45 days (or sometimes a longer agreed time period). Conversely, having the tribunal determine an appeal is time-consuming with a backlog of approximately 30,000 First Tier tribunal appeals, a wait of at least a year is common.

Reviews can only be carried out once an appealable decision is made. When a caseworker makes a decision, they will tell the taxpayer if they can appeal against the decision and what to do if they disagree.

Examples include closure notices following an enquiry, assessments and information notices.

For indirect taxes (for example, VAT, excise or customs duty), the decision letter will include an offer of a review. Customers will have 30 days from the date of the decision to accept the offer, but if they have new information or arguments it is possible to delay the start of the review just in case agreement can be reached.

For direct taxes (for example, corporation tax or income tax), customers will have 30 days from the date of the decision to appeal to HMRC. Either at that stage, or later, they may request a review or they may be offered one. Again, if they have new information or arguments, then it would be useful for them (or their agent) to provide these to the caseworker to consider before the review process begins, as this may resolve the dispute.


Statutory reviews are carried out within HMRC’s Solicitor’s Office and Legal Services (SOLS) department i.e. a different department to that which made the decision, and so the review is conducted by officers who are entirely outside the management chain of those making the disputed decisions.

Financial considerations

Requesting a statutory review would normally only incur a monetary cost if the customer seeks representation. As three-quarters of reviews do not go on to appeal and costs are generally higher for appeals in time and money, it is often more cost-effective to initially request a review.

How can accountants help the review officer?

To help this process operate smoothly, it is important that you and/or your client clearly explain to the review officer what your client disagrees with and why. Did they rely on any case law or other evidence to form that view? Do they have any further information to provide to the review officer to support their case? Conversely, it is also useful to know what they agree with, as this will help focus the review to the key points in dispute.

Facts and figures

In 2019/20 SOLS carried out 22,649 statutory reviews, of which more than 56% were cancelled or varied as a result of a review.

Of the 22,649 reviews, just over 40% related to VAT penalty cases where, in most instances, “reasonable excuse” was a consideration at review. 81% of the decisions were varied or cancelled at review.

A similar picture arose in 2018/19 with SOLS reviewing 28,068 decisions and cancelling or varying 50% of decisions.

Again, of the 28,068 reviews, 14,905 (53%) related to VAT penalty cases, with two thirds% of decisions cancelled or varied at a review.

The key figure for accountants and their clients to be aware of is that following a review, the majority of cases do not proceed to a tribunal, which suggests they can be a very effective way to settle a dispute.

It’s not just HMRC and users that have recognised the Statutory Review process is a quicker and more effective alternative to a tribunal. Their merits have been acknowledged by both the Office of Tax Simplification and the House of Lords.

More information

More information about appeals and reviews can be found in the HMRC Appeals reviews and tribunal guidance manual.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.

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