Monday 5 November 2018 7:28 pm

HMRC fights firms for years in toughest tax cases

UK authorities have found themselves caught in several tax trench wars, as the average age of unresolved tax battles with the UK’s biggest businesses climbs.

In the year to the end of March, HMRC’s open tax battles rose from an average duration of 34 months to 39 months, meaning many cases are taking over three years to reach a conclusion, according to research by Pinsent Masons.

Although some 85 per cent of cases reach a conclusion within 18 months, some are dragging on longer as tax authorities battle through litigation to increase revenues from large firms.

Steven Porter, a partner at Pinsent Masons, said: “Businesses face huge disruptions as HMRC continues to drag out even the most basic of tax disputes.”

“Having investigations open for over three years leaves businesses in limbo,” he added. “It is not just the disruption, this also creates a sense of uncertainty over what the business’ liabilities might be and that uncertainty can negatively impact on decision making”

Though the duration of investigations increased, the number of cases open at the end of the year fell to 3,302, down from 3,617 in 2016/17 – suggesting HMRC is caught remains caught in legal quagmires with several companies that have the resources to draw out tax battles.

An HMRC spokesperson said: “The tax affairs of large businesses are incredibly complex, often spanning across many international borders. This complexity means that such investigations may take longer to resolve, but the tax at stake means it is right that we take this time to secure the monies due to the UK. Last year, we secured over £9 billion in additional tax revenue from the largest and most complex businesses.”