The taxman will no longer negotiate settlements with taxpayers who use tax
planning that is challenged in court.
HM Revenue & Customs is to adopt a no compromise stance in cases where it
believes it has a strong case. In such cases HMRC will not settle for anything
less than 100p in the pound.
Chris Oates, tax partner at Ernst & Young, said the move would provide
more clarity about whether a case would go to litigation, but said there were
concerns about the consequences of the strategy.
‘There is a question of resources, said Oates. ‘Resources are pressed at
HMRC, and this strategy is going to add to that pressure, as several new
solicitors will have to be hired to cope with the increased number of cases.’
There are also concerns that on complex tax matters, inspectors will no
longer be able to use their judgement to work through issues with businesses, as
they will have to pass on issues for litigation.
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The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform
Legislation on the NICs changes to be brought forward in the autumn following publication of 'the full effects of the changes to Class 2 and Class 4' in the summer