It revealed taxpayers under enquiry by HMRC’s CSI (charities, savings and international) and by HMRC’s pensions units waited an average of 303 days for their enquiries to close in 2015/16, compared to 243 days the in 2014/15.
The number of enquiry cases still open at the end of 2015/16 also increased sharply with 4,011 enquiries conducted by HMRC’s CSI and pensions units remaining open in the last year, up from 494 open enquiries in 2014/15.
The law firm highlighted that prolonged waiting times put taxpayers under greater stress and adds significantly to their legal fees.
RPC raised concerns that the Revenue could be intentionally dragging out enquiries in order to wear taxpayers down and force them to settle instead of going to the tax tribunal.
Adam Craggs, partner at RPC said, “The substantial increase in the number of open cases in the last year is arguably evidence of such a strategy, especially when considered together with HMRC's increased use of 'nudge' letters which are intended to persuade taxpayers to concede their dispute.”
He added, “HMRC is under intense pressure to increase the tax yield and it is prepared to pressure taxpayers in order to maximise the tax take.
“By keeping cases open for long periods of time HMRC is placing financial pressure on taxpayers and generating increased stress for those taxpayers who find themselves caught up in a lengthy HMRC enquiry.”
RPC claimed that advanced payment notices (APNs) - which require taxpayers to pay any tax in dispute before the enquiry is closed and before the dispute has been determined by the tax tribunals or courts - have reduced the incentive for HMRC to close enquiries.
According to RPC, once HMRC has issued an APN and the taxpayer has paid the disputed tax, there is little incentive for HMRC to progress the enquiry expeditiously as this would allow any subsequent appeal to be decided by the tax tribunal and, should HMRC lose, it would have to return to the taxpayer any money paid to it under the APN.
A spokesperson for HMRC argued, “We only open enquiries when we have to, and we close them down as fast as we can once we receive the right information from the taxpayer.”
The spokesperson added, “If a taxpayer thinks that there is unreasonable delay they can seek a closure notice from a Tribunal if the enquiry is a self-assessment enquiry.
“Taxpayers can apply for alternative dispute resolution (ADR) at any time if they don’t agree with HMRC’s decision or what we’re checking.”