The Chartered Institute of Taxation (CIOT) has expressed strong concerns about HMRC’s tax dispute litigation and settlement policy in a recent written submission to the Treasury Sub Committee. After being lambasted for decades of operating so called 'sweet heart deals' with big business HMRC's new strategy appears to be diametrically opposite: litigate all cases without any apparent regard for the costs or outcomes.

The CIOT considers that HMRC should make concessions to reasonable viewpoints and Alternative Dispute Resolution (ADR) should be promoted more widely as a means of curbing this unwelcome trend, which is resulting in an ever increasing number of Tribunal cases. Further, it is concerned that technical specialists, HMRC’s solicitors’ office, and tax counsel, are often engaged too late in the process, long after HMRC’s decision is taken and a dispute has arisen.  

Commenting on the submission, CIOT President Ray McCann said:

“Contrary to the LSS, our members report that HMRC seem to be taking increasing numbers of cases where the prospects of success appear much lower than 50 per cent.

“Alternative Dispute Resolution (ADR) mediation can work well and needs to be promoted more widely as a mechanism for resolving disputes. ADR is effective when it is used genuinely to seek to resolve disputes. Unfortunately, our members have also experienced cases where the HMRC officers at the ADR meeting did not have the authority to reach a settlement, when the taxpayers had senior personnel attending who were able to take decisions that could have led to settlement. This leads to increased costs, makes subsequent litigation more difficult, and makes ADR less attractive to pursue. HMRC should be prepared to engage with authority in this process.”

In the submission, the CIOT said its members report increasing instances of HMRC adopting an interpretation of the law to bring in the greatest tax, which is contrary to HMRC own mantra of ‘right amount of tax on time’. This extends to running contradictory arguments in different cases, and/or ignoring their own published guidance, custom and practice, and relevant case-law. The CIOT is concerned at the reference in HMRC’s single departmental plan which says that it will ‘maximise revenue due’ rather than wording such as ‘maximise collection of revenues properly due’.

Ray McCann has been asked by the Treasury Sub Committee to give evidence on the Conduct of Tax Enquiries and the Resolution of Tax Disputes inquiry on 9 July 2018.

Editorial Comment

As many agents will note HMRC's policy of 'shoot now and ask questions later' appears to mean that once a dispute arises HMRC forms a view, sticks to it and is then oblivious to any new technical arguments. The Statutory Review has becomes a meaningless exercise.


CIOT press release

Ray McCann new president speech