Quarter of large-scale tax settlements declined under new system
Initial Tax Assurance Commissioner report outlines newly-established tax dispute settlement system
NEARLY A QUARTER of proposals by business to settle large-scale tax disputes were declined by HMRC’s new assurance commission.
The newly-established department, with Edward Troup as tax assurance commissioner, has been established to assure the quality and clarity of large-scale tax disputes.
Three commissioners now address contentious and sensitive cases, with their roles established in Februrary 2012 following concerns over how such cases are handled in the wake of the ‘sweetheart’ deals controversy.
In the first six months under the system, the Tax Disputes Resolution Board referred 22 cases to the commissioners for a decision. Some 11 proposals by taxpayers worth £1.3bn were accepted, six proposals by taxpayers worth £285m were accepted with conditions, and five of the proposals worth £398m were rejected.
The commissioners consider disputed cases where £100m or more is at stake – down from the previous £250m threshold – and a sample of cases which fall between £10m and £100m.
In 2012/13, 18 cases were heard in the Court of Appeal or Court of Session, and four in the Supreme Court, to which HMRC was a party. Of those cases, 14 affirmed HMRC’s stance, including the significant decision on the scope of legal professional privilege. Six went against HMRC’s arguments and two judgments are yet to been issued. The courts also issued decisions on 33 avoidance cases, with 27 going in HMRC’s favour, protecting more than £1bn in tax.
In his preface to the report, tax assurance commissioner Edward Troup said: “The overwhelming majority of taxpayers pay the right amount of tax and pay it on time. But they need to be confident that we take action against those who do not do so, and that we apply the rules even-handedly to all taxpayers.
“I oversee our decision-making process and, with two other commissioners, I act as the final point of approval for settlements in the largest and most sensitive cases. This direct involvement in the oversight of large settlements, and scrutiny of the processes, allows me to provide assurance that we do consistently achieve the correct tax outcomes for the Exchequer under the law.”