HMRC’s tax assurance commissioner publishes his first annual report on resolving disputes.
HMRC’s tax assurance commissioner publishes his first annual report on resolving disputes.
HMRC stresses ‘theoretical’ estimate of tax under consideration.
Commissioners decide whether or not to accept a taxpayer’s proposal.
A report setting out HMRC’s new approach to resolving disputes with taxpayers shows that the department takes ‘an appropriately robust stance’ to ensure that the right amount of tax under the law is collected in high-value tax cases, the department has told Tax Journal.
A package of measures to strengthen HMRC’s governance arrangements, announced early last year, included the appointment of a tax assurance commissioner. Edward Troup’s first report, published on 2 July, noted that he has an ‘explicit challenge role’ to assess whether a proposed settlement ‘secures the right tax efficiently and in so doing treats taxpayers even-handedly’.
HMRC acknowledged that there was a need to restore public confidence in response to criticisms levelled by the Commons Public Accounts Committee (PAC) in December 2011 and the National Audit Office’s review in June 2012 of HMRC’s handling of five cases. However, Troup’s report pointed out that the NAO found that those cases had all led to reasonable outcomes for the exchequer.
‘We acknowledged the error made in one case but we did not – and do not – except that large tax disputes had been resolved on an inappropriate basis,’ the report said. It noted that in May 2013 the High Court, hearing an application for judicial review by UK Uncut Legal Action, held that although HMRC made errors in settling a dispute with Goldman Sachs there were ‘significant and substantial reasons for HMRC’s decision’.
Governance
Troup, together with two other commissioners, now acts as ‘the final point of approval for settlements in the largest and most sensitive cases’.
A new Tax Disputes Resolution Board (TDRB) was established in September 2012. It considers disputes when a decision point is reached in a case where the ‘tax under consideration’ (see panel) across all risks exceeds £100m; a case which is sensitive; and a sample of cases where the tax under consideration is at least £10m but less than £100m. It considered 31 cases between September 2012 and March 2013, and referred 22 cases of those cases on to the commissioners.
The commissioners accepted taxpayers’ proposals in six cases, worth £1,368m in total; they accepted six proposals worth £289m with additional conditions attached; and they rejected five proposals worth £398m.
‘Massively valuable’
Jason Collins, head of tax at Pinsent Masons, claimed that the report showed that half of the high-value settlements reached by HMRC last year were considered inadequate. ‘There is a risk that the tax assurance commissioner is unduly feeling the need to flex some muscle as the system beds in,’ he said.
But an HMRC spokesman told Tax Journal: ‘In these high-value cases, a settlement is not reached until the commissioners make their decision on whether to accept a proposal from the taxpayer. So it is wrong to suggest half of settlements were inadequate.’
The commissioners were not agreeing or rejecting settlements reached by the HMRC case teams, the spokesman said – they were deciding whether or not to accept proposals from taxpayers. ‘Where proposals are not accepted, the dispute will be resolved by litigation unless the taxpayer makes a revised, acceptable proposal.’
He added: ‘These figures show that HMRC takes an appropriately robust stance to ensure that the right amount of tax under the law is collected in these cases.’
Bill Dodwell, head of tax policy at Deloitte, welcomed the report. ‘It’s clearly a good thing, and an important thing, to have this report and to have a tax assurance commissioner,’ he told Tax Journal. ‘Rebuilding trust in HMRC’s ability to collect the right amount of tax, from taxpayers big and small, is important.’
The number of boards and panels working on tax disputes within HMRC was notable, he said. The overview of the governance process, set out on page 6 of the report, showed that HMRC experts were working together to reach conclusions on a range of issues. ‘That’s massively valuable in providing the assurance that people need.’
Nigel Doran, consultant at Macfarlanes, also welcomed publication of the report, which set out 'the impressive steps ... taken to improve the governance and transparency of its dispute resolution process'. The new process 'should go a long way to avoiding any repeat of the embarrassing UK Uncut judicial review', he said. 'If anything, it may err on the side of too much reviewing of settlements, particularly of the more routine cases’.
HMRC’s tax assurance commissioner publishes his first annual report on resolving disputes.
HMRC’s tax assurance commissioner publishes his first annual report on resolving disputes.
HMRC stresses ‘theoretical’ estimate of tax under consideration.
Commissioners decide whether or not to accept a taxpayer’s proposal.
A report setting out HMRC’s new approach to resolving disputes with taxpayers shows that the department takes ‘an appropriately robust stance’ to ensure that the right amount of tax under the law is collected in high-value tax cases, the department has told Tax Journal.
A package of measures to strengthen HMRC’s governance arrangements, announced early last year, included the appointment of a tax assurance commissioner. Edward Troup’s first report, published on 2 July, noted that he has an ‘explicit challenge role’ to assess whether a proposed settlement ‘secures the right tax efficiently and in so doing treats taxpayers even-handedly’.
HMRC acknowledged that there was a need to restore public confidence in response to criticisms levelled by the Commons Public Accounts Committee (PAC) in December 2011 and the National Audit Office’s review in June 2012 of HMRC’s handling of five cases. However, Troup’s report pointed out that the NAO found that those cases had all led to reasonable outcomes for the exchequer.
‘We acknowledged the error made in one case but we did not – and do not – except that large tax disputes had been resolved on an inappropriate basis,’ the report said. It noted that in May 2013 the High Court, hearing an application for judicial review by UK Uncut Legal Action, held that although HMRC made errors in settling a dispute with Goldman Sachs there were ‘significant and substantial reasons for HMRC’s decision’.
Governance
Troup, together with two other commissioners, now acts as ‘the final point of approval for settlements in the largest and most sensitive cases’.
A new Tax Disputes Resolution Board (TDRB) was established in September 2012. It considers disputes when a decision point is reached in a case where the ‘tax under consideration’ (see panel) across all risks exceeds £100m; a case which is sensitive; and a sample of cases where the tax under consideration is at least £10m but less than £100m. It considered 31 cases between September 2012 and March 2013, and referred 22 cases of those cases on to the commissioners.
The commissioners accepted taxpayers’ proposals in six cases, worth £1,368m in total; they accepted six proposals worth £289m with additional conditions attached; and they rejected five proposals worth £398m.
‘Massively valuable’
Jason Collins, head of tax at Pinsent Masons, claimed that the report showed that half of the high-value settlements reached by HMRC last year were considered inadequate. ‘There is a risk that the tax assurance commissioner is unduly feeling the need to flex some muscle as the system beds in,’ he said.
But an HMRC spokesman told Tax Journal: ‘In these high-value cases, a settlement is not reached until the commissioners make their decision on whether to accept a proposal from the taxpayer. So it is wrong to suggest half of settlements were inadequate.’
The commissioners were not agreeing or rejecting settlements reached by the HMRC case teams, the spokesman said – they were deciding whether or not to accept proposals from taxpayers. ‘Where proposals are not accepted, the dispute will be resolved by litigation unless the taxpayer makes a revised, acceptable proposal.’
He added: ‘These figures show that HMRC takes an appropriately robust stance to ensure that the right amount of tax under the law is collected in these cases.’
Bill Dodwell, head of tax policy at Deloitte, welcomed the report. ‘It’s clearly a good thing, and an important thing, to have this report and to have a tax assurance commissioner,’ he told Tax Journal. ‘Rebuilding trust in HMRC’s ability to collect the right amount of tax, from taxpayers big and small, is important.’
The number of boards and panels working on tax disputes within HMRC was notable, he said. The overview of the governance process, set out on page 6 of the report, showed that HMRC experts were working together to reach conclusions on a range of issues. ‘That’s massively valuable in providing the assurance that people need.’
Nigel Doran, consultant at Macfarlanes, also welcomed publication of the report, which set out 'the impressive steps ... taken to improve the governance and transparency of its dispute resolution process'. The new process 'should go a long way to avoiding any repeat of the embarrassing UK Uncut judicial review', he said. 'If anything, it may err on the side of too much reviewing of settlements, particularly of the more routine cases’.
