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Requesting an HMRC review is often worthwhile

Requesting an HMRC review is often worthwhile

Taxpayers were successful in more than half of tax tribunal cases against HMRC during the 2015-16 tax year. That’s according to figures obtained by law firm Pinsent Masons.

A taxpayer can request a review of any HMRC decision, and the recent findings indicate mistakes or overreaches on HMRC’s part are a more common phenomenon than many would assume.

The review system was introduced by HMRC with the aim of resolving disputes without the need for a full tribunal. These reviews are carried out by a team, from HMRC that were not involved in the original case. Their job is to reconsider the original decision, and provide an explanation accordingly.

Pinsent Masons found that in the year up to 31 March 2016, amends were made in 31% of non-penalty reviews, 65% of VAT penalty reviews and 52% of all other penalty reviews.

Similar figures – of 33%, 65% and 39% respectively – were found for the year up to 31 March 2015.

There was also a rise in the number of decisions formally appealed to an independent tax tribunal by taxpayers in 2015-16

5,161 such appeals were filed with the tribunal, 3,917 appeals of which were settled either by way of a formal hearing or by agreement before the hearing. This represents an increase of almost 450 cases on the previous tax year.

The figures also found that the proportion of cases where the tribunal ruled in favour of the taxpayer increased by 5% in 2015-16 compared to 2014-15.

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