Last year, HMRC faced over a third more judicial reviews compared to the year before. UK law firm RPC said this is a direct result of the tax authority’s more aggressive approach towards taxpayers.

In 2017, HMRC faced 122 judicial reviews – up 36% from 90 the year before. Recently, HMRC has come under considerable political pressure to hit targets and increase tax revenues.  This has led to HMRC adopting a very dogmatic and aggressive approach, leaving them vulnerable to legal challenges by taxpayers.

Recent issues at stake in judicial reviews against HMRC include:

  • HMRC issuing information request notices to taxpayers who were not within its jurisdiction
  • HMRC making retrospective changes to the treatment of Customs Duty
  • Cases where HMRC ignored its own published guidance in relation to rules on residence and the National Minimum Wage.

Simple errors and unfair action

According to RPC, the rising number of judicial review applications are a sign that HMRC is increasingly exceeding its powers and acting unfairly towards taxpayers.

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“HMRC’s increasing aggression and intransigence mean that judicial reviews are becoming far too common. They are all too often the result of simple errors by HMRC and a dogged refusal to correct them,” Adam Craggs, RPC’s partner and head of the tax disputes practice, said.

Serious challenges

He added: “This substantial increase in judicial review challenges would suggest that taxpayers are not prepared to be treated unfairly by HMRC. And are willing to challenge its decisions and seek redress from the High Court.”

RPC has said that it is vital that taxpayers and their advisers consider whether it is appropriate to challenge HMRC’s actions through a judicial review when they consider HMRC is behaving unfairly or acting beyond its powers.

“We have seen a number of cases in the last 12 months where HMRC has withdrawn its decision once it became apparent that our clients intended to issue judicial review proceedings,” Craggs explained. “It is regrettable that taxpayers are forced to take such action before HMRC acknowledges its mistakes and does the right thing.”

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