A propuesta de Liquidación, a proposed assessment, is not a debt: it is a draft in which the Administration announces what it intends to do and gives you time to explain why it is wrong. What happens from there follows a fixed order, and each step has its time limit, its cost and its effect on the steps that follow. It is worth knowing the map before taking the first step, because some doors close behind you.
The full sequence
| Step | Time limit | Before whom |
|---|---|---|
| Written arguments (alegaciones) against the proposal | Whatever the notice grants, usually ten working days | The same office handling the file |
| Provisional assessment | Opens the article 62.2 payment period | — |
| Recurso de reposición, an appeal for reconsideration | One month from the day after notification | The same office that issued the decision |
| Economic-administrative claim (Reclamación económico-administrativa) | One month from the day after notification | The Tribunal Económico-Administrativo Regional, the regional tax tribunal within the administration |
| Judicial review (recurso contencioso-administrativo) | The one set by the courts' rules, once the administrative route is exhausted | The courts |
Written arguments, which is where most is won
This is the cheapest step and the most wasted. At this stage there is not yet a final decision, nothing has to be paid, nothing has to be guaranteed, and the file is decided by whoever investigated it, who is the person best placed to correct a clerical error or a poor valuation.
Useful arguments do three things: they identify precisely which element of the proposal is disputed, they provide the evidence that supports your version, and they reason out the applicable rule. What they do not do is tell the story from the beginning or appeal to good faith in the abstract.
Accepting the proposal and paying closes the argument about the debt, and sometimes that was the right thing to do (there are penalty reductions that depend on agreement). But it is a decision, and it should be taken after checking that the calculation is right. We see proposals with calculation errors, with properly supported expenses that were not counted and with the wrong periods. Paying without looking turns someone else's mistake into your own debt.
The assessment and the period it opens
If the arguments do not succeed, or are not filed, the assessment arrives. With it an enforceable debt arises and the payment period in article 62.2 of the Ley General Tributaria, the General Tax Act, begins: until the 20th of the following month if notified between the 1st and the 15th, and until the 5th of the second month after if notified between the 16th and the last day of the month.
That period runs in parallel with the period to appeal, and they are independent. Appealing does not in itself suspend payment, and that confusion is what makes orders for enforced collection appear on debts the taxpayer believed were on hold.
Reconsideration or claim: you have to choose
Both are lodged within one month from the day after notification, and they are alternatives: they cannot be pursued at the same time. If you opt for reconsideration, you have to wait for its decision (express or deemed) before going to the economic-administrative tribunal.
| Appeal for reconsideration | Economic-administrative claim | |
|---|---|---|
| Who decides | The same office that issued the decision | A different body, independent of tax management |
| Pace | Faster | Slower, sometimes considerably |
| When it makes sense | Clerical, calculation or obvious factual errors; issues resolved by showing a document | Disagreements on legal approach, valuations, interpretation of the rules |
| What remains afterwards | If dismissed, the economic-administrative route remains open | If dismissed, the court route remains |
The practical rule we apply is this: when the matter is won by showing a document that was not taken into account, reconsideration; when it is a matter of legal approach, go straight to the claim, because asking the same office to change its mind about its own approach rarely adds anything and uses up months.
Suspending the debt while it is argued
This is where the real money is at stake, and where most people go wrong by omission.
- Suspension is not automatic. Lodging the appeal does not in itself stop collection.
- With sufficient security (a bank guarantee or a surety insurance certificate, among others), suspension is obtained as of right under the rules.
- Without security there are exceptional routes, such as suspension with other forms of security, suspension because of harm that would be impossible or difficult to repair, or the correction of an arithmetical error, but they are just that: exceptional, and they have to be proved.
- It must be requested expressly, and in time. A request for suspension filed after the payment period has expired is too late to avoid the surcharge.
And there is an alternative that is sometimes the sensible one: pay and appeal. If the matter is won in the end, what was paid is refunded with interest; if it is lost, no surcharge has built up. Comparing the cost of a bank guarantee for two years with the financial cost of paying the debt early is a sum worth doing with numbers rather than principles. If the choice is to defer what has to be paid, the route is on deferring or paying in instalments.
The tribunal's timings
The economic-administrative tribunal has one year from lodging to decide. Once that has passed without a decision, the claim may be treated as dismissed so that you can move on, or you can wait for the express decision, which remains compulsory.
In practice, many claims take longer than a year. That has a good side and a bad one. The good side is that, with the debt suspended, the matter does not press. The bad side is that throughout that time interest keeps running on the suspended debt, so a long claim that is lost costs more than a short one that is lost.
The penalty follows its own path
It bears repeating because it is the most expensive confusion in this area: appealing against the assessment does not appeal against the penalty, and appealing against the penalty has an effect on the reductions that appealing against the assessment does not. Both decisions are taken together, calculator in hand, not one after the other. It is explained in the penalty is handled separately.
How we decide whether to appeal
Not on principle. With three pieces of information: how much is at stake, what reasonable chance there is that the argument will succeed (without promising anything, because nobody can), and what the route costs, adding up fees, the cost of the guarantee if the debt has to be suspended, and the time. When the sum does not work, we say so, and we say so before starting.
If you have a proposed assessment or an assessment on the table, send it to us complete, with its date, through the tax office letter form: the first thing is to know which time limit is running, and that cannot wait.
The time limits in this guide are the general ones of tax procedure; the one in your file is stated in the notice itself, and that is the one that governs. Appealing does not guarantee winning, and no serious firm will tell you otherwise.
The sum that decides whether to appeal
Before taking the decision it helps to put it into four lines, because written down it is much clearer than thought through:
| Item | What goes in |
|---|---|
| Amount at stake | The disputed tax, plus the penalty if there is one, plus the interest that will keep accruing during the procedure |
| Cost of appealing | Fees, the cost of the guarantee if the debt is to be suspended, and the management time it takes |
| Cost of not appealing | Paying, and losing the argument for later years if the issue recurs every year |
| Strength of the argument | An honest assessment, which is never a certainty |
The fourth line is the one no firm can turn into a percentage, and be wary of anyone who does. The third is the one most often forgotten: in a recurring matter (an expense deducted every year, a classification that repeats) accepting today may mean accepting for the next four years as well, and then the amount at stake is not the amount of this assessment.
Errors in a proposal that are corrected by showing a document
Not everything that arrives miscalculated needs a legal argument. A considerable share of the proposals we review contain one of these faults, and all of them are resolved at the written-arguments stage without appealing anything:
- Properly supported expenses that were not counted, usually because the receipt reached the file after the calculation.
- Withholdings or payments on account already paid in that were not deducted.
- The wrong period: one quarter is adjusted for events belonging to the next.
- Duplications, where the same amount appears under two items.
- Errors in the interest calculation, with start or end dates that do not add up.
That is why the first reading of a proposal is done with a calculator, not with the statute book. Before arguing whether an approach is correct, check whether the arithmetic is.
Frequently asked questions about your tax office letter
Does appealing suspend payment?
Not automatically. Suspension has to be requested and, as a general rule, is obtained by providing sufficient security. Without security there are exceptional routes that have to be proved. A late request does not avoid the surcharge.
Reconsideration or claim?
They are alternatives and are lodged within one month. Reconsideration fits when the matter is settled with a document or a calculation; the claim, when what is disputed is a legal approach, before a body other than the one that made the assessment.
How long does an economic-administrative tribunal take?
It has one year to decide, after which the claim may be treated as dismissed in order to move on. In practice many take longer, and during that time interest keeps running on the suspended debt.
If I accept the assessment, do I also accept the penalty?
They are separate decisions with separate appeals. However, some penalty reductions depend on appealing against neither the assessment nor the penalty, so the decision has to be taken looking at both together.