Of the cases that end up in court, HMRC wins three quarters, but few disputes actually reach this stage since a vast majority of tax disputes are resolved by agreement, the Tax Assurance Commissioner’s Annual Report shows say Harris & Co accountants Northampton #accountantsnorthampton
While the taxman won fewer cases than in the previous year – down to 66% from 68% - there were 7,081 appeals brought to the tribunal in 2013-14 in total, the latest report outlining HMRC’s performance in resolving disputes from August 2013 to March 2014 shows.
The were 48 referrals to Commissioners which involved decisions worth £3,869m, of which 32 involved over £100m including tax in dispute as well as four others to the value of more than £500m. In more than half of these cases (28) the taxpayer’s position was upheld while 12 disputes rejected the taxpayer’s arguments. Five others remain under review.
The report shows that the agreement reached in a majority of cases follow discussions between the tax authority and the taxpayer. Where litigation is necessary, HMRC win in more than three quarters of the cases.
For the year in question, 39 decisions were issued on avoidance cases, with 30 decided in HMRC’s favour, protecting £2.7bn of tax.
Contentious Issues Panel
HMRC’s Business Tax Contentious Issues Panel had 18 referrals on 15 separate issues during the year, and looked at a variety of issues such as the handling of a deemed lease premium dispute with a number of Private Finance Initiatives and how to handle capital allowances on long-life assets in the aircraft industry, after industry agreements have come to an end.
The Personal Tax Contentious Issues Panel had 15 referrals covering 13 separate issues, and considered matters such as the appropriate tax treatment in cases involving misapplication of funds by charitable trusts and large-scale avoidance. The Panel also discussed the detail of HMRC’s proposed approach and how long taxpayers should have before they came forward to resolve the dispute on those terms before HMRC moved to litigation. It also considered what HMRC’s response should be in litigation cases where arguments based on equity rather than tax law were raised by taxpayers.
Of these 63 were referred to the Tax Disputes Resolution Board and 33 others referred to business-level case boards.
The report says that HMRC reviews provide an early, cost-effective opportunity to resolve issues, and most cases are settled at that stage without the need for an appeal to the tribunal.
HMRC case-workers make a large number of decisions each year in relation to review requests, including more than a million in VAT alone, of which the most common relate to tax assessments and penalties.
Non-penalty cases, such as liability decisions and closure notices, often involve significant discussion between HMRC and taxpayers. HMRC has upheld it decisions in two thirds of such cases.
HMRC’s Audit and Risk Committee has found the report to be ‘a fair report on and representation of HMRC’s governance and assurance of its largest and most sensitive tax disputes’.