Less than half of the appeals against HMRC’s VAT decisions were upheld by the taxman’s internal review system over the whole of 2012, down from the 60 per cent upheld during 2011. Just 12,092 out of a total of 25,456 appeals from companies were upheld.
Accountancy firm UHY Hacker Young, which released the data yesterday, said the review system appeared to be getting tougher on firms and siding with HMRC more in the cases, which re-examine decisions over late payment and other intractable tax disputes.
“We were very pleased with the approach that HMRC took to internal VAT reviews when the system was first set up in 2009,” said UHY Hacker Young VAT partner Simon Newark. “HMRC dealt with reviews on a case-by-case basis and looked carefully at businesses’ claims.
“However, recent anecdotal evidence in the tax and accountancy industry suggests that this approach has begun to change,” Newark added. “The drop in successful reviews appears to support this.”
Newark said many firms speculated that the government’s belt-tightening measures were putting pressure on HMRC to bring in more cash and spend less time considering the merits of cases.
“The concern is that this pressure is leading HMRC’s review teams to either hurry through cases without looking as carefully at the details as they would before, or [to them] rubber-stamping officers’ decisions on far less solid grounds,” Newark said.