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Appeal - How do you convince the tax court?
In tax law, it is not mandatory to litigate with a lawyer. This means that a taxpayer or his (tax) advisor can also conduct the appeal process themselves. After that, practical and basic tools are provided for the taxpayer or his advisor to file an appeal with the tax chamber of the court. Attention will also be paid to common pitfalls.
Term
It is important that the appeal must be lodged with the court within six weeks of the ruling on the objection. This six-week period is a tough one. If an appeal is lodged outside this period, the appeal will in principle be declared inadmissible. In general, it is relatively difficult to get an appeal filed too late still dealt with in terms of content. After all, there must then be a so-called “excusable time limit”.
Submission: digital or physical
Nowadays, the appeal can be submitted digitally (via DigiD, e-Herkenning or the lawyer card). If that is not possible or if this is not preferred, the appeal can be physically filed with the court.
evidentiary
In the case of a physical submission, provide proof of the timely submission. This can be done, for example, by having a courier or bailiff issue the appeal. If a courier is engaged, it is important to make clear agreements with the courier (company) about providing a delivery receipt. A bailiff will provide that proof automatically.
Discussions about timely submission
The aforementioned filing method (by a courier or bailiff) may sound disproportionate. However, practice shows that filing appeals regularly goes wrong. After all, we also have experience in assisting tax advisors in cases where documents submitted by mail do not arrive or arrive too late. It is annoying to have discussions about the timeliness of filing an appeal. That energy can be better used for the content of the dispute. Better safe than sorry. Therefore, the tip is to ensure proof of timely submission.
Appeal
The law lists what an appeal must contain (article 6:5 General Administrative Law Act). The appeal must include:
- the taxpayer's name and address
- the date of filing the appeal
- a description of the objection ruling against which the appeal is directed
- the grounds for appeal
A copy of the appeal decision shall be attached to the appeal.
Pro forma appeal
Establishing good grounds for appeal requires care and can take time. It is also possible to split the appeal. A so-called pro forma appeal can then first be filed within the period of six weeks. This includes all the points described above, with the exception of the grounds for appeal. The pro forma appeal asks the clerk of the court for a period of time to file the grounds for appeal.
click here for an example of a pro forma appeal.
Please note: If the appeal states somewhere why the taxpayer disagrees with the appeal ruling, the (the administration of the) court will most likely regard the submitted document as a normal and complete appeal. The inspector will then be given the opportunity to file a statement of defence. There will therefore no longer be an opportunity to file an appeal. By the way, an addition to the grounds of appeal can be sent to the court at any time, but it is preferable to include all the taxpayer's arguments in the appeal grounds as much as possible and to avoid fragmented views being brought to the court's attention.
Importance of professional grounds
To explain the importance of the grounds for appeal, insight is provided into the course of a standard appeal procedure. A tax appeal procedure usually consists of the following four actions:
- taxpayer's appeal and grounds
- defence from the tax authorities
- possibly: 10 days from the taxpayer and/or the tax authorities
- session
In three of these transactions, the taxpayer has the opportunity to express his position. In fact, of the three acts, the document containing the grounds for appeal is the procedural document in which the tax court must be persuaded.
Indeed, in a standard procedure, the 10-day document is in principle seen as an addition to the grounds for appeal. That document can be submitted to the court no later than the eleventh day prior to the hearing. This allows, for example, new documents to be sent to court. Examples include documents that were not available to the taxpayer at the time of drawing up the grounds for appeal. The hearing can be used to highlight certain aspects and answer court questions.
In short, in a standard appeal procedure, the document containing the grounds for appeal is the key document for the taxpayer.
How do appeals get as much convincing as possible?
Litigation is a profession in its own right. Every business is different and requires customization. There is therefore no universal recipe for making compelling grounds for appeal. However, in general terms, the following tools can be provided.
Analysis: Creating compelling grounds for appeal starts with a clear analysis of the tax legal issues. This may involve, for example, making an inventory of the standard/rule of law, case law and/or parliamentary history. A selection will have to be made of the arguments that offer a chance of success. Determine where the crux of the dispute lies. For example, is it about a pure question of law or about the classification of the facts? If the latter is the case, it may be necessary to make a further question/investigation into the facts.
Burden of proof: The question must be answered about the distribution of the burden of proof. It may be important to provide certain evidence to support the taxpayer's position. In addition, knowledge of the procedural rules (formal tax law) is essential. For example, it will have to be assessed whether the inspector can rely on the reversal and increase of the burden of proof. If the inspector has not yet noted anything about this in his appeal ruling, this may still be addressed in the defence. The judge may also be able to have a view on the distribution of the burden of proof on their own initiative, so that it is good to take this into account as much as possible when preparing the grounds for appeal.
Structure: After the analysis, the text of the grounds for appeal can be drawn up. It is recommended to work with a clear structure that at least addresses the individual grounds for appeal. In the defence, the tax authorities work with a standard structure, including: general information, process, facts, points of dispute, description of taxpayer and tax authorities, consideration and conclusion. This can serve as an inspiration or a general guideline, but it does not have to be the ideal structure for every dispute. The structure can be different each time and should preferably be tailored to the current discussion. The most important thing is that the text is easy to read and that the arguments before the tax court are logical to follow. The structure helps to achieve this goal.
Appendices: It must be considered which annexes are attached to the grounds of appeal. The tax authorities are obliged to attach to the defence the documents relating to the case. This means that documents in the tax authorities file will most likely be submitted to the procedure by the tax authorities.
The following can be taken into account. As noted above, the grounds of the appeal provide an opportunity to include the tax court in the taxpayer's position. This is easier if the taxpayer clearly includes the annexes on which he bases his professional grounds. It must be avoided that it becomes a puzzle for the tax court.
On the other hand, care must also be taken to ensure that the tax court is unnecessarily overwhelmed with a large number of documents. If there is no difference of opinion on certain issues, it will not be necessary, for example, to substantiate each fact with one or more annexes. An efficient approach should be chosen.
If the choice is made to attach attachments, it is good to include an attachment overview (after the text of the grounds for appeal and before the annexes).
Conclusion: include a conclusion in the appeal grounds. In it, formulate concrete requests for the tax court. If the assessment needs to be moderated, state in the request the amount to which the assessment should be reduced. Other points of attention include: formulating a request for court costs and/or possibly relying on exceeding the reasonable period.
Reasons for appeal: how not to do it
We are involved in many tax procedures. In some cases, we are involved from the very beginning - the book research - and in others we step in later. In the latter case, it is possible that appeals have already been drawn up, for example by the taxpayer or his advisor/administrator. The grounds for appeal are formless and we therefore see them in various forms. In the context of the lessons learned The following are three examples of how appeal grounds should not be used.
Example I: a wealth of thoughts and arguments. This is a long, multi-page text that lists thoughts and arguments. No grounds for appeal have been identified. It is therefore up to the tax court to consider which grounds of appeal should be read in the text.
Example II: a high-quality and clearly written piece. The paper contains clear legal considerations with relevant references to case law and parliamentary history. What is missing, however, are the facts. No evidence is presented and hardly any facts are even provided. This does not have to be problematic if the dispute is essentially about a pure legal issue. If this is not the case, a translation must be made to the taxpayer's situation, in order to argue why, in the case of the taxpayer, the assessment should lapse.
Example III: a thoughtful but difficult to access structure, which obscure the argument. The paper advocates a primary, subsidiary, more subsidiary and even more subsidiary position. This goes through seven levels (i.e.: primary, subsidiary, more subsidiary, even more subsidiary, even more subsidiary and even more subsidiary). The arguments and facts are casually mentioned in one of the seven levels, but remain understudied. Indeed, when preparing the grounds for appeal, all attention was paid to the complex structure and the financial impact associated with each point of view.
Help, my professional grounds have not been used optimally
This blog describes how the appeal process can be arranged as convincingly as possible in the situation that you are still at the beginning. We regularly experience that the professional grounds have not been set up optimally. Then no man is overboard yet. Although the starting position may not be ideal, the appeal process still offers sufficient opportunity for repair. And even if the appeal is (almost) over, there is always the possibility of an appeal.
Are you a tax advisor, accountant or taxpayer and would you like to exchange views on a proposed or ongoing tax procedure? Please feel free to contact us (+31631969502 whether debbie.liem@heronlegal.com).
[Note: This contribution was written by Debbie Liem. She is a tax lawyer and a deputy judge in the tax chamber of the Gelderland District Court. Debbie wrote this blog in a personal capacity. Debbie cannot act as a lawyer in the work area of the tax chamber of the Gelderland District Court.]
