A third route, Alternative Dispute Resolution (ADR), runs alongside either of the above. ADR uses a neutral HMRC mediator to help resolve the dispute and is particularly useful when the disagreement is about facts, the evidence used, or stalled communication, rather than pure points of law. Using ADR does not affect your right to a review or to appeal. The earlier you raise the dispute (during the enquiry, not after the decision), the more options stay open.
- Missing the 30-day window. The clock starts on the date of the decision letter, not the date you receive it. Past 30 days, you can still apply for a late review or appeal, but the matter becomes one of HMRC's or the tribunal's discretion. The case is materially harder to argue before you have started arguing the substance.
- Skipping the review and going straight to tribunal. The internal review is free, takes 45 days, doesn't extinguish your right to appeal afterwards, and is overturned more often than people expect. Tribunal is right for some cases, but on automated decisions it usually adds cost and delay without strengthening the position.
- Assuming ADR is only for major disputes. ADR works particularly well when the dispute is about facts or evidence, not law: misunderstandings about what the records show, what activity the business did, what was said in earlier correspondence. An HMRC mediator can unblock a stalled enquiry where the case officer and the business have hardened positions.
- Filing the appeal without specifying grounds. "I disagree" is not a ground of appeal. The dispute must be anchored: a procedural error, a misapplication of law, a reasonable excuse, or a factual dispute on the underlying liability. Without grounds, the review or tribunal cannot do its job.
- Paying the assessed VAT before the dispute is resolved. For most VAT appeals the disputed VAT does need to be paid or deposited before the tribunal entertains the case (the "pay to play" rule), unless hardship is shown. But penalties and interest are stood over during review and appeal. Plan the cash carefully.
Which HMRC decisions can be disputed
The starting point is section 83 of the VAT Act 1994, which sets out the matters that can be appealed to the tribunal. The list is exhaustive: decisions on registration or cancellation, the VAT chargeable on a supply, the amount of input tax credited, partial exemption methods, penalties, interest, security requirements, repayment claims, and a number of other matters. If your dispute is on one of these, you have appeal rights. If it falls outside section 83 (for example, HMRC's refusal to provide non-statutory clearance on a future supply), the tribunal has no jurisdiction.
The practical implication is to look at the decision letter itself. Every appealable HMRC decision must set out the right to ask for a review and to appeal, with the 30-day time limit. If those rights are not mentioned, the decision may not be one section 83 covers, and the route is different (often a complaint to HMRC, or judicial review in rare cases).
Your three routes: review, ADR, tribunal
For VAT, the decision letter offers two options simultaneously. The third runs alongside either:
- Internal review. A different HMRC officer, not involved in the original decision, looks at the case again. It is free, takes up to 45 days, and concludes either by upholding, varying, or cancelling the original decision. If the review upholds the decision, the 30-day window to appeal to the tribunal reopens from the date of the conclusion letter.
- First-tier Tribunal (Tax Chamber). An independent judicial body, not part of HMRC. The tribunal hears the case afresh on the evidence presented and can affirm, vary, or cancel the decision. There is no fee, but the timeline is longer (typically 12 to 18 months from notification to hearing).
- Alternative Dispute Resolution (ADR). A structured mediation process led by a trained HMRC mediator. ADR works in parallel with the review or tribunal route: it does not replace them, and accepting ADR does not extinguish your appeal rights.
The expensive misconception is that the choice is binary. It isn't: ADR can be used during an enquiry before any formal decision, alongside an active appeal, or after a tribunal application has been lodged. For indirect tax disputes specifically, HMRC asks you to either complete the review or get the tribunal acknowledgement before applying for ADR.
How the internal review works
The reviewing officer reads the file from scratch. They can call for further evidence, take their own view on the legal test, and are not bound by the original decision. The conclusion comes in one of three forms: cancelled (the original decision is overturned), varied (changed, usually but not always in your favour), or upheld (the original stands).
HMRC must conclude the review within 45 days of accepting the request, unless you both agree a longer period. If HMRC misses the deadline without an agreed extension, the review is treated by statute as having upheld the original decision, and the 30-day tribunal window starts. So a "silent" review is in practice a loss on paper, but it still gives you a clean appeal path.
In practice, the review is underused. Where the original decision was automated (late filing, late payment) or made on a thin file, the review is the first time a human has actually weighed the case. We see decisions overturned at review more often than business owners expect, particularly where the original was a system output applied to facts that needed proper consideration.
A VAT decision in front of you with 30 days to act? HMRC Response Support gives you a senior specialist's read on the right route.
How Alternative Dispute Resolution works
ADR uses a neutral HMRC mediator, an officer trained in mediation who is independent of the case team, to help both sides explore the dispute and look for a resolution. It is not a statutory process. HMRC can decline applications it does not consider suitable (cases under criminal investigation, debt recovery, or matters where the dispute is purely about discretion are typically excluded). The mediator decides within 30 days of the application whether the case is suitable.
ADR works particularly well when the dispute is about facts or evidence rather than law: misunderstandings about what the records show, what activity the business actually did, what was said in earlier correspondence, where progress has stalled because positions have hardened. It works less well in pure "all or nothing" legal arguments, where one side has to be right and the other wrong.
For VAT (an indirect tax), HMRC asks you to either accept the offer of a review (and wait for it to conclude), or appeal to the tribunal and receive an acknowledgement letter, before applying for ADR. Throughout the process, your underlying right to a review or appeal is preserved.
The tribunal route and the "pay to play" rule
Most VAT appeals can be notified directly to the First-tier Tribunal (via the HMCTS website or by post) within 30 days of the decision, or 30 days of the review conclusion letter if you took the review first. HMRC then has between 42 and 60 days to file its statement of case, depending on the case category, and you have a corresponding window to respond. A hearing follows, often 12 to 18 months later.
For VAT specifically, there is an additional condition that catches people: under section 84 of the VAT Act 1994, an appeal against a VAT assessment, the VAT chargeable on a supply, or the amount of input or output tax will not be entertained by the tribunal unless the disputed amount of VAT has been paid or deposited with HMRC. This is the "pay to play" rule. The tribunal can waive it on hardship grounds if you can show paying would cause genuine hardship. Most modern penalty and interest disputes are not caught by this requirement.
The grounds of appeal matter. Vague disagreement does not succeed. Anchor the case in one of the four most useful headings: a procedural error by HMRC, a misapplication of the law, a reasonable excuse, or a factual dispute on the underlying VAT position. Each carries its own line of evidence and case law.
When you might need expert VAT advisory
The three-route framework is straightforward, but the strategic choices within it (which route to use first, how to frame the grounds, when to introduce ADR) change the outcome materially. In practice, the situations below are where a senior specialist's read makes a real difference:
- The decision involves a material amount of VAT or penalty and the route choice (review first vs straight to tribunal vs ADR alongside) genuinely affects the outcome
- The dispute is about facts that HMRC has misunderstood rather than law: the kind of case where ADR can unlock a result faster than tribunal
- You're an accountant whose client has received a decision and you want a senior specialist's view on the grounds and route before lodging the appeal
- You've lost an internal review and need a clear-eyed assessment of whether the tribunal appeal has merit and how to frame it
- HMRC has alleged deliberate behaviour or refused to issue a closure notice, and the dispute is starting to drift towards higher-stakes territory (Code of Practice 9, criminal referral risk)
- The "pay to play" rule is biting and you want to explore the hardship application route before lodging the tribunal appeal
Whether you're a business owner or an accountant working on a client case, we focus on the VAT questions where extra expertise pays off, and we work in plain English.