Enquiries into large businesses’ tax affairs handled by HMRC’s Large Business Directorate were open for an average of 45 months in 2019/20, up from 43 months in the previous tax year, and 34 months in 2016/17, according to law firm Pinsent Masons.
The firm suggests that the delays are likely to have been caused by HMRC taking longer to reach a decision to settle or close investigations, with officers handling these large, complex cases ‘significantly slowed down by having to consult with a diverse range of HMRC departments’.
Pinsent Masons says that HMRC closed 1,986 mostly straightforward investigations into big businesses last year (down by 21% from 2,528 in 2018/19), leaving a backlog of ‘more difficult cases where it is difficult for HMRC to build a winnable case against a business’.
Steven Porter, partner at the firm, said: ‘The backlog of old tax investigations isn’t helpful to businesses or HMRC, but its slow decision-making means it can do very little to clear it. Officers at HMRC often seem reluctant to make a decision to litigate, settle or close a case and that results in those cases running on for nearly four years on average. It is understandable that HMRC doesn’t want to miss out on any of the tax it believes it is owed but the cost to businesses of a tax investigation lasting four of five years can be very substantial.’
In its November 2020 compliance yield report, HMRC said that for enquiries concluding in 2019/20, the average length of time taken to settle an enquiry was 17 months (including cases in litigation) and that over the same period the Large Business Directorate ‘reached decision point on risks within 18 months in 84.04% of cases’.
Enquiries into large businesses’ tax affairs handled by HMRC’s Large Business Directorate were open for an average of 45 months in 2019/20, up from 43 months in the previous tax year, and 34 months in 2016/17, according to law firm Pinsent Masons.
The firm suggests that the delays are likely to have been caused by HMRC taking longer to reach a decision to settle or close investigations, with officers handling these large, complex cases ‘significantly slowed down by having to consult with a diverse range of HMRC departments’.
Pinsent Masons says that HMRC closed 1,986 mostly straightforward investigations into big businesses last year (down by 21% from 2,528 in 2018/19), leaving a backlog of ‘more difficult cases where it is difficult for HMRC to build a winnable case against a business’.
Steven Porter, partner at the firm, said: ‘The backlog of old tax investigations isn’t helpful to businesses or HMRC, but its slow decision-making means it can do very little to clear it. Officers at HMRC often seem reluctant to make a decision to litigate, settle or close a case and that results in those cases running on for nearly four years on average. It is understandable that HMRC doesn’t want to miss out on any of the tax it believes it is owed but the cost to businesses of a tax investigation lasting four of five years can be very substantial.’
In its November 2020 compliance yield report, HMRC said that for enquiries concluding in 2019/20, the average length of time taken to settle an enquiry was 17 months (including cases in litigation) and that over the same period the Large Business Directorate ‘reached decision point on risks within 18 months in 84.04% of cases’.
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