RPC Comments - HMRC forced into U-turn on Litigation and Settlement Strategy
HMRC's Solicitor's Office stretched to breaking point due to previous inflexible approach
HRMC's decision to take a less aggressive approach to resolving tax disputes means that businesses with an outstanding tax claim with HMRC might now be able to negotiate a sensible settlement with them, says Reynolds Porter Chamberlain LLP (RPC), the City law firm.
RPC explains that the permanent secretary for tax at HMRC, Dave Hartnett, recently announced a softening on HMRC's inflexible "Litigation and Settlement Strategy" (LSS), which was introduced in 2007.
He points out that the LSS was a very resource intensive approach, which HMRC can no longer sustain, saying:
"HMRC's Solicitor's Office has been put under a great deal of strain and has been operating at full capacity for some time now. HMRC does not have available to it the budget necessary to recruit sufficient numbers of lawyers to sustain such an aggressive approach.
"This less combative approach is as much a response to HMRC's inability to keep up with the workload generated by the LSS as it is a pragmatic decision to increase the tax yield in the short term.
"The LSS has put HMRC at risk of reducing the tax yield as it has been forced by the LSS to drop cases where it might have been able to negotiate a settlement for 40-50% of the tax in dispute.
"By negotiating on claims, HMRC may well increase its tax take in the short term but it raises questions about the long-term impact of such a change in strategy on the Treasury's coffers."
Adds Adam Craggs: "Businesses will be delighted that HMRC has finally decided to take a pragmatic, commercial approach to disputes. There is now an excellent opportunity for businesses in dispute with the Revenue to reach a sensible agreement that both sides can be happy with."
Reynolds Porter Chamberlain LLP
Tel: 020 3060 6421
Nick Mattison or Louis Auty
Mattison Public Relations
Tel: 020 7645 3636