HMRC Plans to Reach Agreements and Use Mediation in Tax Disputes
HMRC (HM Revenue & Customs) is planning to adopt a less aggressive approach than its current stance in resolving tax disputes with businesses.
The move is being considered by the regulatory body in a bid to cut the growing legal logjam that has locked up billions of pounds in court battles over avoidance.
Dave Hartnett, who is the Permanent Secretary for tax at HMRC, said in an interview to the Financial Times that there have been instances when officials of the body have been a little too tough in disputes conducted over tax assessments.
The move, if agreed on, will be a part of HMRC’s initiative for greater efficiency.
Hartnett says that the move could cause a surge of revenue over the next couple of years. This would be on top of the extra money that will be collected in cases regarding individual tax evasion.
HMRC said that it had no plans of returning to its old practice of giving package deals to multiple tax avoiders as this was what was blamed for the rise in cases of tax avoidance in the early part of the 90’s.
Hartnett said that it would stick to its policy of “if it is a strong case, we will fight to the death”.
Harnett said that HMRC’s litigation strategy had been understood sometimes. The strategy was introduced in the year 2007.
Harnett further said that HMRC is packed with a whole lot very intelligent people who could be a little too black-and-white about law.
HMRC will be asking inspectors to increasingly reach for agreements in cases where there are a range of plausible amounts for tax due because of varying legal interpretations. It will also be testing third-party mediation in a few of its cases.