Litigation strategy may cause lengthier investigations

Tax inquiries into large businesses now take more than three years to settle reaching 39 months in 2017-18 up 15% from 34 months in 2016-17 according to information obtained by Pinsent Masons.

The international law firm believes HMRC is focusing on more complex cases and is unwilling to back down over technical points. This can result in innocent businesses becoming drawn into lengthy investigations over simple technical errors.

HMRC’s litigation and settlement strategy (LSS) was designed to ensure consistency in resolving tax disputes. However this can make it difficult for individual teams at HMRC to settle disputes for less than the full amount of tax initially claimed and may be a factor in the increased time taken to conclude an investigation.

Pinsent Masons says HMRC is also increasingly opening inquiries by sector such as retail or financial services. These can involve multiple businesses at once...