HMRC’s tougher approach resulted in a 36% increase in judicial reviews between 2016 and 2017, according to RPC, which obtained the figures under a freedom of information request.
The considerable political pressure to hit targets and increase tax revenues “can lead to HMRC adopting a very dogmatic and aggressive approach, which can leave it vulnerable to legal challenges”, RPC said.
In 2017, HMRC faced 122 judicial reviews, compared with just 43 in 2014.
The rising number of judicial review applications is a sign that HMRC is “increasingly exceeding its powers and acting unfairly towards taxpayers”, the law firm warned.
Fighting back
Adam Craggs, partner and head of the tax disputes practice at RPC, says it is vital that taxpayers and their advisers consider whether it is appropriate to challenge HMRC’s actions through a judicial review when they think the taxman is behaving unfairly or acting beyond its powers.
He said: “HMRC’s increasing aggression and intransigence mean that judicial reviews are becoming far too common and are all too often the result of simple errors by HMRC and a dogged refusal to correct them.”
The substantial increase “would suggest that taxpayers are not prepared to be treated unfairly by HMRC and are willing to challenge its decisions and seek redress from the High Court”.
Craggs added: “We have seen a number of cases in the last 12 months where HMRC has withdrawn its decision once it became apparent that our clients intended to issue judicial review proceedings.
“It is regrettable that taxpayers are forced to take such action before HMRC acknowledges its mistakes and does the right thing.”
Number of judicial reviews taken against HMRC:
Source: RPC
