From 1 April 2009, tax appeals will be heard by the First-tier Tax Chamber within the tribunal set up under the Tribunals, Courts and Enforcement Act 2007. The First-tier Tax Chamber will operate under a common set of procedural rules for all tax appeals.
For appeals made but not heard before 1 April 2009, the procedural rules of the First-tier Tax Chamber will apply. However, the new tribunal has the discretion to continue to apply the rules of the existing tribunals—General and Special Commissioners for Income Tax and the VAT and Duties Tribunal—on a transitional basis.
For indirect tax appeals made before 1 April 2009 this means the tribunal may continue to operate the existing costs rules in the VAT and Duties Tribunal. Where this happens the practice set out by the right hon. Robert Sheldon, now Lord Sheldon of Ashton-under-Lyne, on 13 November 1978—and restated on 24 July 1986 by the right hon. Peter Brooke, now Lord Brooke of Sutton Mandeville—will also continue to apply on a transitional basis, and HMRC will not seek costs from appellants in most cases. HMRC has today placed on its website guidance about these transitional arrangements.
As the Government said in “Transforming Tribunals: Implementing Part 1 of the Tribunals, Courts and Enforcement Act 2007—The Government’s Response”, published on 19 May 2008 by the Ministry of Justice, HMRC will cease to operate the Sheldon practice in relation to appeals made on or after 1 April 2009.