Lovells chosen to lead HMRC litigation pilot

City law firm Lovells has secured a litigation contract with HM Revenue and Customs to instruct on a corporation tax case as part of an outsourcing pilot project.

According to a source familiar with the arrangement, the contract relates to a current case ­ understood to involve transfer pricing ­ which is considered to be ‘extremely sensitive’. The case is yet to be heard.

The Lovells work is to be headed by Kevin Ashman, a former head of the firm’s worldwide tax practice and former manager of the tax practice in London. His biography says that in recent years he has specialised in the taxation of funds and property as well as working on tax disputes and litigation. He refused to comment.

Though details of the firm’s deal with HMRC have not emerged, observers speculated that Lovells might forgo an hourly rate in exchange for a predetermined lump-sum payment.

HMRC’s outsourcing of the litigation contract to Lovells comes just weeks before a scheduled change to the appeals and tribunals structure.

The reform is thought to be a more cost-effective way for HMRC to resolve disputes, with all tax disputes eventually transferring to the new tribunal system.

The department has closed 90 tax and VAT offices as part of plans to reduce the number of civil servants handling tax and VAT claims by 25,000 between 2004 and 2010.

HMRC also recently announced plans to outsource part of its debt collection function to private-sector suppliers. The department is set to run pilot schemes involving the delegation of debt collection to low-value debt collection specialists and the sale of some debts considered to be irrecoverable.

A spokesman for HMRC said its plans in relation to the outsourcing of litigation had not changed as a result of changes to the tribunal system.