Appeals shoot up 14% after HMRC powers beef-up

Tougher tax collecting tactics and penalties imposed by HMRevenue & Customs have contributed to a 14% increase in appeals to tax tribunals, according to UHY Hacker Young.

Challenges from people claiming to be overtaxed or unfairly punished rose from 4,311 in 2007 to 4,897 during 2008, the last year figures are available before the VAT and Duties Tribunal and the Special Commissioners Tribunal became part of the Unified Tax Chamber.

UHY Hacker Young said HMRC’s current litigation and settlement strategy "under which it pledges to fight a case through the courts rather than negotiate a settlement if it believes it has a strong enough case, has also helped drive up the number of disputes heard by the tax tribunals."

Roy Maugham, tax Partner at UHY Hacker Young, said: "HMRC’s increasingly aggressive approach to tax collection and litigation has resulted in the soaring number of appeals to tax tribunals over the last few years.

"HMRC seems to be less and less deterred by the cost of litigation. It is now much more prepared to go all the way through the tribunals rather than negotiate a fair settlement with the taxpayer as it used to. It is doubtful whether this is the most effective and pragmatic way to solve problems."

HMRC said: "The increase in appeals is largely linked to a handful of VAT cases.

"The appeals process is there to help HMRC and taxpayers clarify points of tax law. Our updated powers and litigation and settlement strategy ensures that when the principle being contested is clear and well understood the tax rules are properly enforced."

Further reading:

The lowdown from UHY Hacker Young