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HMRC Investigations Taking Longer To Complete

by Robert Lee, Tax-News.com, London

22 September 2015


Nearly a quarter of tax investigations by HM Revenue and Customs's (HMRC's) Local Compliance Unit remain unsolved more than a year after being launched, according to research by law firm RPC.

As of March 2, 2015, the Local Compliance Unit had 115,000 tax investigations open against individual taxpayers and businesses. RPC found that more than 3,800 of these cases have been open for at least three years.

Adam Craggs, Partner and Head of RPC's Tax Disputes team, said: "Prolonged inquiries by HMRC impose a substantial burden on individual taxpayers and businesses. Regardless of the outcome, those being investigated will have to bear the burden of the costs associated with dealing with HMRC and this can entail substantial professional fees."

RPC said that such investigations can have a considerable impact on the day-to-day operations of smaller businesses. It is concerned that this burden is unlikely to lessen, with HMRC under pressure from the Government to maximize revenue.

The firm recommended that the investigations process be accelerated and a time limit or "cut-off" point should be introduced. In an inquiry would then need to be completed within this time frame, it suggested.

Craggs said: "Introducing a more transparent timescale would ensure that HMRC completes its inquiries in a timely manner thus keeping costs and disruption to taxpayers and businesses to a minimum. Currently, the only way to force HMRC to conclude a long-running enquiry is to apply to the tax tribunal for an appropriate direction."

TAGS: individuals | compliance | tax | small business | business | tax compliance | law | United Kingdom | fees | tax authority | HM Revenue and Customs (HMRC) | HM Revenue and Customs (HMRC)

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