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Tax appeal process

Tax appeals are one of the daunting tasks for laymen who just focus on their own businesses.  Some may ignore their rights to object and appeal even though they are not very satisfied with the adjustments on tax deductions or disapproval of tax claims.

Tax appeal process can be divided into three major phrases. First of all, the taxpayer must have received an excessively demanded tax assessment including the additional assessment (i.e. penalty) which requires an objection to be raised within one month.  Second phrase is that the tax authority will examine and review the assessment in question with regard to the evidences, arguments and prevailing laws and practices and, if and when necessary, raise questions to obtain further evidences and supporting documents. If the assessor is not satisfied that the assessment should be revised, he will put forward all the evidences and arguments to the Commissioner for determination – and which means the taxpayer has little chance to win at this stage.  No matter what, if the taxpayer has chance to win in the dispute,  the Chief Assessor or any other deputies or delegates may further consider the evidences and may arrange other settlement ways or compromise. Majority of cases should be settled before the formal issue of Letter of Determination; but, unfortunately, if your case cannot be settled and you are not satisfied, the Commissioner’s written determination would be issued.  This would tell you the reasons on which the refusal is based.  If you still unsatisfied with the reasons, you need to go to the appeal stage.

In the appeal stage, the tax assessments and all of the evidences and arguments would be dealt with in a specialized tribunal called Board of Review or in Courts where lawyers and professionals or judges would objectively review the case and “hear” the arguments of two side in more detail to determine who should win.   But, almost all of the cases which were put before the Board of Review would lose.  In Hong Kong, unless the decision is reached in the Final Court of Appeal, the case can theoretically be challenged.  It goes without saying that you need to hire lawyers to represent you and pay huge sum of money which may not be entirely recoverable even though you can win in the end.

Efforts in an earlier stage of appeal could make obvious difference in terms of costs and benefits.  Good objection letter which can produce the best possible results in the first place would minimize further costs and pressure. It would also draw a pathway to get the appeal successful in the coming stages.