Give tax tribunals short, strong guiding principle, says Faculty

21 Jan

The Faculty has called for new Scottish tax tribunals to be given a "brief but powerful" overriding objective.

Under current Scottish Government plans, the guiding principle for the tribunals would be to deal with cases "accessibly, fairly, quickly and effectively".

However, the Faculty favours a sharper doctrine and has suggested that "fairly and justly", as used by UK tribunals, should be adopted.

The Upper Tax Tribunal for Scotland and the First-tier Tax Tribunal for Scotland are being established under the Revenue Scotland and Tax Powers Act 2014.

The Scottish Government sought views on draft rules for the tribunals, and the Faculty welcomed the fact that those rules had been based, for the most part, on UK tax tribunal rules which had been in operation for some years and appeared to work satisfactorily.

"The overriding objective of the UK rules is to deal with cases 'fairly and justly'. In the draft Scottish rules this becomes 'accessibly, fairly, quickly and effectively'. In both the UK and draft Scottish rules, one next finds the same five points mentioned as examples of what is included in the overriding objective. It may therefore be that, in practice, there will be little, if any, significant difference between the ways in which the two overriding objectives are implemented, despite the obvious differences in their wording," said the Faculty.

"However, we recommend that the overriding objective of the Scottish tribunals to deal with cases 'fairly and justly'. The words 'fairly and justly' are brief, but powerful. Overriding objectives should be readily understandable objectives, relevant and applicable to all cases before the Tribunal, being objectives which the Tribunal itself can take steps to further and which do not conflict with each other.

"The 'fairly and justly' overriding objective of the UK tribunals meets all of those tests, whereas the more complex overriding objective of the Scottish tribunals, as presently framed, meets none of them."

One of the draft rules deals with mediation, and the Faculty said it was generally in favour of wider use of mediation to resolve tax disputes, provided the parties agreed to it. UK rules imposed an obligation, not dissimilar to the draft Scottish rules, to seek to facilitate the use of Alternative Dispute Resolution, added the Faculty.

"In our experience, however, that obligation is often ineffective in practice because the Tribunal only becomes seriously engaged with cases at a relatively late stage, by which time the parties may well be too far down the track towards a Tribunal hearing to be diverted towards mediation.

"It is to be hoped that the working practices of the Scottish tribunals will enable the obligation…to be discharged more effectively."

The Faculty noted that it appeared from the draft rules for the Upper Tax Tribunal for Scotland that an award of expenses to the successful party, which was the norm in the UK Upper Tribunal (Tax Chamber), would be the exception.

"We believe that it is more let expenses follow success (in the absence of unusual countervailing considerations). We therefore recommend that the draft rules about expenses should be amended to reflect that position," stated the Faculty.

The full submissions can be viewed at