Now standing at 22,246, the number of tax disputes waiting to be heard by the Upper Tax Tribunal has increased by 32% in the last year, and international law firm Pinsent Masons has claimed HM Revenue & Custom’s (HMRC) high profile clampdown on tax avoidance is to blame.
Despite the Judicial Appointments Commission currently hiring tax tribunal judges to ensure cases are heard faster, Pinsent Masons said that HMRC’s aggressive trial strategy means it could still be some years before a ruling is reached on complex cases.
The firm suggested the growing number of cases will be a particular concern for those taxpayers who have been issued with an accelerated payment notice, because it forces them to pay the disputed tax up front.
“Financial limbo”
James Bullock, head of litigation & compliance at Pinsent Masons, said: “The time taken for cases to be completed needs to come down substantially so that taxpayers are not left in financial limbo for what can be years.”
He said a long wait is more of an issue for the taxpayer who has already had to pay the tax that is in dispute because it is unlikely they would be compensated by HMRC for the amount they could have earned from investing their money.
“To that extent a slow-moving system plays in HMRC’s favour – it adds to the risk for taxpayers,” he said. “Considering the sea change in attitudes towards tax avoidance over the last five years, a more pragmatic approach by HMRC to negotiate settlements is highly unlikely to encourage more tax avoidance.”
“Most people who were sold avoidance schemes did not realise what they were getting involved with and are very unlikely to get involved with tax avoidance again. Clearing up the overhang of those cases could reduce the time taken to complete all cases by a substantial margin.”
