The number of taxpayers seeking to challenge HMRC through judicial review jumped by nearly one-fifth last year.
The FT reports that HMRC faced a record 90 applications for judicial review as aggrieved individuals and businesses tried to overturn what they claimed were illegal or unreasonable decisions.
Adam Craggs, head of tax disputes at RPC, a City law firm, said the upturn was a sign of the growing pressure on HMRC to increase the tax yield:
“Until two or three years ago I could count on one hand the number of judicial reviews against the Revenue. In the past couple of years it has gone through the roof.
HMRC has a duty to act fairly and lawfully, but more and more taxpayers are finding that it is falling short of the mark.”
Mr Craggs said a number of cases were being brought by taxpayers who faced bankruptcy:
“A lot of the arrangements and transactions go back 10 years. The notices arrive on the doormat out of the blue and they don’t have the cash to pay it.”He said the increase in applications from 42 in 2014 underlined concerns raised in the tax profession about the controversial powers HMRC has gained in recent years. Some of the applications represented claims by several thousand individuals.
Some of the cases involve HMRC’s ability to issue accelerated payment notices (APNs), which allow it to demand upfront payment of disputed tax from people who took part in avoidance schemes. The taxpayer is required to pay the bill within 90 days, without any right of appeal.
HMRC said:
“Accelerated payments have changed the economics of tax avoidance by requiring those under investigation for tax avoidance to pay the disputed tax upfront, putting them in the same position as the majority of taxpayers who pay first and dispute later. HMRC has won all five judicial reviews decided by the courts on the accelerated payments regime.”The increased powers given to HMRC coupled with the increased pressure on it to bring in more money is a toxic combination.
Tax does have to be taxing.
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