A quarter of British businesses feel it is harder to reach agreements with HMRC, due to strict and sometimes convoluted internal guidelines, a survey by Oxford University’s Centre for Business Taxation has revealed.
Just over 25% of businesses surveyed said that, since 2007, it has been harder to settle tax disputes with HMRC.
Despite the majority describing the tax authority’s approach as reasonable, the research highlighted tensions over the internal guidelines and procedures for resolving arguments, known as the Litigation and Settlement Strategy (LSS).
Andrew McKenna, a partner and head of tax investigations at Smith & Williamson, said he was not surprised by the survey’s findings, as the LSS strategy appeared to have ‘hampered’ inspectors’ abilities to come to agreements with businesses.
“There does seem to be variation in how large and small businesses are treated. With smaller businesses, it could be down to the quality of the inspector, or it could just be the case itself.”
The researchers from the Oxford University Centre for Business Taxation suggested that “the attitudes and experience” of the officials involved could make a difference to the difficulty of negotiations.
Jason Collins, head of tax at Pinsent Masons, a law firm, said the largest companies were more likely to get an advantage because they were dealt with by more experienced HMRC officials. He said:
“It can favour the biggest businesses, which tend to get access to the more senior decision makers.”
The study also found that 36% of businesses believe the approach from HMRC has changed for the worse, with increased media exposure on the settlement process.
A Treasury spokesperson said:
“We adopt a level playing field in our dealings with customers and aim to resolve tax disputes through collaborative working, whatever their size. This is clearly laid out in the Litigation and Settlement Strategy, which all HMRC’s case workers follow.”
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