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Within the last two months, we have had considerable success in relation to a number of appeals we have made to the First-tier Tribunal, in relation to substantive challenges to HMRC decisions and penalties.
In each case, HMRC had vigorously opposed our position for as many as two years and just before the tribunal was due to consider our appeal, HMRC withdrew its opposition.
Ultimately, conceding that it was wrong in its previous position.
For our clients, it had caused considerable stress and worry, and we thought it was unfair that HMRC had aggressively resisted it position for so long and then completed a ‘U turn’. As a result, we submitted a Freedom of Information (‘FOI’) Request to HMRC, to establish how widespread this problem was.
We asked HMRC if it can provide information on:
“the number of occasions in the last 3-years where HM Revenue and Customs has withdrawn from proceedings between the point where the taxpayer has appealed HMRC’s decision to the First-tier tribunal and the start/commencement of the tribunal hearing/substantive consideration of the appeal?”
HMRC did not provide a direct response to our question, it was suggested that it would be too expensive to collect this information, although it did confirm that the information is available.
However, HMRC did offer the information in relation to the Legal Operations Teams, which deals with the “bulk of FTT proceedings” and therefore, offers a broad picture of the issue.
The results are as follows:
|Tax Year||Appeals conceded/withdrawn by HMRC||Total cases||Percentage of cases conceded/withdrawn by HMRC|
|2016 – 17||1269||4542||28%|
|2017 – 18||1306||8452||15%|
|2018 – 19||1023||6922||15%|
The numbers above show all of the cases dealt with by the Legal Operations Teams and the corresponding cases conceded/withdrawn by HMRC each year.
One thing we may conclude is that there are consistently over 1000 cases each year where HMRC drives a taxpayers’ appeal to the door of the tribunal, whilst HMRC considers its position unsustainable, whether initially, following legal advice or where a technical position changes.
Of course, there will be some cases that are ‘on the fence’, where the law is uncertain. However, it is unlikely that this is always the case.
This certainly raises broader questions about HMRC practices and procedures in assessing whether to oppose an appeal in tribunal, the balance of power between HMRC and the taxpayer and the overall appropriate use of taxpayers’ money.
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