HMRC Faced with Record Number of Calls for Judicial Reviews

An unprecedented number of applications were made for judicial reviews against HMRC during 2016, according to the London-based law firm RPC.

A total of 90 such reviews were called for over the course of last year, which represents an increase from 76 in 2015 and from just 42 in 2014.

RPC has suggested that the increase is a consequence of HMRC’s use of Accelerated Payment Notices (APNs), which effectively demand upfront payment of disputed tax amounts within 90 days.

Recipients of APNs can be either businesses or individuals, with many having been contractors from within the IT and medical professions.

According to RPC, the rise in the number of calls for judicial review raises questions about whether HMRC has been misusing the powers afforded to it as a tax-gathering organisation via APN mechanisms.

APNs are designed to function as a means of helping HMRC cut down on tax avoidance among individuals and businesses operating in the UK but their use over the past few years has been controversial.

As many as 70,000 APNs have been issued in recent years and HMRC says they have been responsible for bringing in more than £3 billion.

RPC says that the amounts of money involved in cases being disputed through calls for judicial review vary from small scale disputes involving individuals and much larger scale cases involving big businesses.

“HMRC has a duty to act fairly and lawfully, but more and more taxpayers are finding that it is falling short of the mark,” said Adam Craggs, a partner and head of tax disputes with RPC.

“With the new powers it has gained in the last few years, it is important that HMRC exercises its powers in a reasonable manner.”

A spokesperson for HMRC said in a statement: “Accelerated payments have changed the economics of tax avoidance by requiring those under investigation for tax avoidance to pay the disputed tax upfront, putting them in the same position as the majority of taxpayers who pay first and dispute later.”

“HMRC has won all five judicial reviews decided by the courts on the accelerated payments regime,” the spokesperson added.