Challenging HMRC pays off 'more than half the time'

The majority of challenges against HM Revenue and Customs (HMRC) by UK taxpayers result in the original decision of the tax authority being amended or thrown out, according to new figures.

In 57 per cent of cases where a review of the initial tax ruling was run by another HMRC official found in favour of the taxpayer, for the year to March 31st 2016.

The data from Pinsent Masons indicate that “assuming your adviser thinks it is sensible, challenging an unfair or disproportionate action by the Revenue is worthwhile”.

Taxpayers can challenge HMRC via a full appeal or, more typically, by review. Since 2010, taxpayers have been able to challenge an HMRC officer by insisting another HMRC officer reviews the original decision.

Initially there were doubts over the independence of HMRC review teams, but the new figures suggest that HMRC staff are not afraid to try and find fault with the decision-making of their colleagues.

Regarding those challenges that ended up at tribunal stage, HMRC figures suggest more taxpayers are getting the results they want. Pinsent Masons’ Out-law.com states that the number of decisions appealed to an independent tribunal – where the taxpayer has won – has increased from 13 per cent in 2014/15 to 18 per cent in 2015/16.

Heather Self, of Pinsent Masons, said: “Many of HMRC’s recent successes relate to complex avoidance schemes implemented some years ago.

“We are now seeing them challenge straightforward commercial planning, and expect taxpayers to win an increasing proportion of future cases.”

Last updated: 31st August 2016