HMRC receives record number of judicial reviews

HMRC received a record number of 90 applications for judicial reviews last year, according to law firm RPC.

RPC found the number of judicial reviews, some of which represent thousands of individuals, to be steadily increasing – having risen from 76 applications in 2015 and 42 in 2014.

The growing need to challenge HMRC’s decisions raises concerns about misuse of a bevy of controversial powers bestowed upon the tax authority in recent years, including Accelerated Payment Notices (APNs). Although created to quash “abusive” tax avoidance, APNs are controversial as they require individuals or businesses suspected of tax avoidance to pay the disputed amount in full within 90 days and without the right of appeal. APNs have thus far brought in £3bn in extra tax revenue.

Other areas where judicial reviews have been submitted include conduct notices, residency of taxpayers and reclaiming of incorrectly charged VAT.

RPC noted that judicial reviews against HMRC are often by “ordinary taxpayers” over relatively negligible sums. However, they also noted an increasing trend of larger corporates bringing judicial reviews against the department’s decisions.

Adam Craggs, partner and head of tax disputes at RPC, commented: “HMRC has a duty to act fairly and lawfully, but more and more taxpayers are finding that it is falling short of the mark.”

“With the new powers it has gained in the last few years, it is important that HMRC exercises its powers in a reasonable manner.

“HMRC has also recently been criticised by judges in judicial reviews for not co-operating fully by disclosing documents that might damage its case.”

Last year, HMRC’s Large Business Directorate collected £943m from large businesses through Accelerated Payment Notices (APNs).

Earlier this year, RPC said that taxpayers under enquiry by HMRC’s CSI (Charities, Savings and International) and Pensions units had waited an average of 303 days for enquiries to close during tax year 2015-16, an increase of 24% compared to the previous year.

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