New figures obtained by UHY Hacker Young show that HMRC are now far more likely to pursue unpaid taxes through the Tribunal system rather than enter into negotiations for a “fair settlement”. Commenting on this fresh information, a tax advisor stated that this is a costly process and it is doubtful how successful litigation actually is.

The fresh data shows that between 2006 and 2007 the number of cases brought before the Special Commissioners Tribunal and the VAT and Duties Tribunal rose from 3146 to 4311.

UHY Hacker Young have attributed this rise to new powers that HMRC have been awarded in order to pursue unpaid taxes. They make particular reference to the ‘Litigation and Settlement Strategy’ which HMRC will use to pursue a case through the courts if they believe it to be “strong enough”. There has also been a great deal of restructuring and integration internally which has released staff time to pursue unpaid tax which is currently top of their agenda.

Roy Maugham, UHY Hacker Young tax partner, stated: “The Treasury needs every penny it can get its hands on. For example the government has just doubled the maximum penalty for tax evasion in relation to offshore bank accounts from 100% to 200%.”

The most recent figures show that the cases brought before the Special Commissioners Tribunal and the VAT and Duties Tribunal rose to 4897 in 2008 from 4311 during 2007.

Mr Maugham concluded: “HMRC seems to be less and less deterred by the cost of litigation. It is now much more prepared to go all the way through the Tribunals rather than negotiate a fair settlement with the taxpayer as it used to. It is doubtful whether this is the most effective and pragmatic way to solve problems.”

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