Member Article

HMRC – even handed or heavy handed?

One of the HMRC’s basic principles is that it will treat ‘customers’ even-handedly.

We’ve commented before about proposals to require users of disclosed tax planning schemes to make upfront payments of tax even before a court has established that tax is due. Whatever one’s view of this - and opinions are polarised – it’s undoubtedly a shift in HMRC’s favour. But even in more run-of-the-mill cases we see a hardening of HMRC’s attitude. Any late payment of tax now seems to trigger some form of penalty (often out of all proportion to the seriousness of the ‘offence’) and, in some cases, taxpayers who think that they’ve done the right thing are caught out by small print and find themselves in trouble.

This might not be too bad if the reverse happened – i.e. when HMRC owed money it would pay it promptly. But experience suggests this isn’t the case.

We recently reported that Littlewoods had been embroiled in a battle to get back proper recompense for VAT paid in error in 1973. The last High Court hearing took 13 days, and that’s far from the end of the matter. Even when the dust has settled on this dispute, taxpayers in the same situation will have to litigate their own cases. Similarly where HMRC has lost on a point of principle it seems to do everything in its power to stop handing back money to taxpayers caught in similar situations.

As taxpayers, the last thing we want is HMRC to hand out money by way of tax repayment without a proper legal basis, but I’m concerned that matters have swung too heavily in HMRC’s favour.

We know that HMRC is proposing a power to enable it to access the bank accounts of taxpayers who refuse to pay up. An even handed approach would be for taxpayers to have a similar right of direct access to HMRC’s bank account, but I’m afraid we can’t see that happening any day soon!

This was posted in Bdaily's Members' News section by George Bull .