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UK Taxpayers Claiming More Victories Against HMRC

by Amanda Banks,, London

16 August 2016

In 2015-16, UK taxpayers were successful in challenging 57 percent of decisions and enforcement actions taken by HM Revenue and Customs (HMRC), according to research by international law firm Pinsent Masons.

Pinsent Masons said that the figure relates to "reviews" requested by taxpayers, whereby HMRC is asked to reconsider its decisions and put forward an explanation. Reviews are carried out by HMRC staff who are independent of the teams who worked on the original case.

Pinsent Masons explained that in 2015-16, HMRC decisions were amended in 31 percent of non-penalty case reviews, 65 percent of value-added tax (VAT) penalty case reviews, and 52 percent of all other penalty case reviews. In 2014-15, the figures for such cases were 33 percent, 65 percent, and 39 percent, respectively.

Where taxpayers disagree with decisions taken by HMRC they can make a formal appeal to an independent tax tribunal. Pinsent Masons said that where appeals were held at a first-tier tribunal, 18 percent were ruled in taxpayers' favor in 2015-16, up from 13 percent the previous year.

The total number of appeals launched rose in 2015-16, to 5,161. During the year, 3,917 appeals were settled either by a formal hearing or by agreement prior to the hearing, up from 3,468 in 2014-15.

Heather Self, Partner at Pinsent Masons, commented: "The statistics suggest that if your professional adviser thinks it is sensible, challenging an unfair or disproportionate action by the Revenue is worthwhile - by either review or, where necessary, full appeal. Mistakes or over-reaches are more common than many might assume and where appropriate, decisions will be amended."

"Many of HMRC 's recent successes relate to complex avoidance schemes implemented some years ago. We are now seeing them challenge straightforward commercial planning, and expect taxpayers to win an increasing proportion of future cases."

TAGS: compliance | tax | tax compliance | tax avoidance | law | United Kingdom | enforcement | HM Revenue and Customs (HMRC) | revenue statistics | HM Revenue and Customs (HMRC)

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