The top 30 firm says there were 7,377 first-tier tribunal cases in 2017/18, up from 6,559 in 2016/17 and 5,161 in 2015/16.
It credits the increase to the improvement in HMRC’s access to data on taxpayers, particularly from banks and foreign tax authorities, and the department’s ability to analyse it using “Connect”, its powerful new software system. This is able to analyse enormous amounts of personal and commercial information, with a view to making connections between individual taxpayers and businesses, income, assets and transactions.
The number of cases, says Price Bailey partner Richard Grimster, shows that, “despite declining staff numbers and resources, HMRC is much better equipped to challenge taxpayers than it has ever been”.
“The amount of data it is able to marshal allows it to paint a much more detailed picture of an individual’s or a business’s tax affairs. This means that HMRC can instigate a greater number of reviews at a significantly lower cost.”
The rise in cases can also be put down to the pressure on HMRC to reduce the £11bn which it estimates is lost to tax evasion annually. However, it is also clear that taxpayers are prepared to contest tax demands in the courts if they think HMRC is treating them unfairly.