23 Jan 2014 04:00pm

Tax judicial review cases rocket

Taxpayers are growing bullish about HMRC’s tougher stance on tax receipts, it seems

According to law firm Pinsent Masons, there has been a large increase – 31% – in the number of individuals and businesses seeking to challenge HMRC decisions.

In 2012 (the most recent data available), there were 51 applications for a judicial review against HMRC, after staying fairly constant at 39 cases in three of the previous four years.

“Judicial review is a remedy of last resort,” said PM head of tax Jason Collins, “so this significant jump in the number of applications shows just how contentious some of HMRC’s decisions have become.

“Although not all these disputes will progress all the way to a full judicial review hearing, this surge in challenges reflects taxpayers’ reaction to the increasingly aggressive stance taken by HMRC to increase its tax take and clamp down on tax avoidance and evasion.”

The firm says that judicial review is often used to try to prevent HMRC from acting unreasonably – like failing to follow its own guidelines or reneging on a ruling it has previously made. It says there have been instances where HMRC has appeared to change its previously-held view of the law and its approach. “In such cases, taxpayers may need to bring a judicial review to require HMRC to keep its word.”

The phenomenon may not last though. As Collins pointed out, government has recently ended a consultation on reform of the judicial review system which could see the number of cases reduced.

“The proposals might limit the ability for representative bodies to bring judicial review proceedings which affect individual taxpayers who do not have the means to bring their own proceedings,” he said.

“They may also hamper the ability of protest groups to intervene where they think a large corporate is getting a sweetheart deal, such as the action brought by UK Uncut last year.

“Any proposals which limit scrutiny over how HMRC goes about its business could ultimately have a negative effect on the quality of the tax authority’s work.”

Julia Irvine


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