What's the "right" level of HMRC litigation?
Posted by Christie Malry on February 20, 2013 at 10:53 pm
Accountancy Age reports that HMRC has issued only seven fines in the last five years to tax avoidance scheme promoters for failure to report properly under DOTAS.
In the article, Bloomsbury Tax suggests that this is evidence that the problem of tax avoidance is overblown.
Elsewhere, Ritchie says that HMRC's low use of some of its powers demonstrates that HMRC isn't serious about tackling avoidance.
And, indeed, these facts are consistent with both hypotheses. So who is right?
OK, it's hard to resist putting the boot into Ritchie. But I don't think lots and lots of litigation would be evidence of a healthy, well-functioning tax system, do you?
As it is axiomatic that there is lots of avoidance, then a healthy system must have lots of litigation.
To argue otherwise would mean the axiom is wrong, which is of course impossible.
if i may speak from personal experience.. (of a multi-million pound dispute with the taxpayer, so not the sort of case at issue here.. but relevant to HMRC's general approach) when HMRC have got a sniff that a taxpayer is on the wrong side of the line, they are psychotic in their persuance of revenue. incompetent? yes. inefficient? yes. but they are absolutely serious and uncompromising.
i think it can depend on who, within HMRC, is leading the charge... but i've been involved (directly and indirectly) in dealings with a number of people up the chain of command.. and have yet to meet one of the ones who'll call the whole thing off for the price of a good dinner.
oh, and all this is in a case which everyone acknowledges is very technical, and where there is no suggestion that anyone involved has actually tried to avoid paying the right amount of tax.