Revealed: HMRC’s backlog of big business tax investigations

HM Revenue and Customs is struggling to finish thousands of tax investigations into suspected tax avoidance by the UK’s largest companies. Nick Huber reports.

HMRC’s large-business service, which deals with the tax affairs of the UK’s 770 largest companies, had 2,314 unresolved enquiries into the companies' tax affairs on March 31, according to figures released to Accounting WEB under the Freedom of Information Act.

Around one third (737) of the unresolved enquiries at the large-business service are more than three years old...

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Comments

82% within 18 months and the other 18%

the_Poacher | | Permalink

...never get settled?

stepurhan's picture

Decision point

stepurhan | | Permalink

How long from decision points to actually getting the tax in. 82% to get to a decision to chase the tax or not does not tell us how long it takes to actually produce results.

And as the_Poacher says, what about that other 18%? Neither resolved nor litigated after 18 months. That sounds pretty poor, even allowing for complexity.

Takes two    3 thanks

Alan Ferris | | Permalink

It takes two to reach a settlement, this report makes it sound as if it is all in the hands of HMRC.  In reality if we do not agree with HMRC then the path is litigation and we all know how long that can take!

Two to Tango    3 thanks

thomas34 | | Permalink

Alan Ferris has beaten me to it.

I for one am pleased that HMRC are pursuing these no doubt complex cases for however long it takes. In the event of an HMRC success there will be no loss to the taxpayer since interest will be added to any settlement at a greater rate than HMG are paying to borrow at present. HMRC were criticised for reaching settlements with Goldman Sachs and Vodaphone which were arguably too lenient.

Now it seems that they're not caving in quickly enough.

Unresolved enquiries (2,314) were up from 2011 (2,721)? How does that work then?

Tom Egerton

 

 

 

Surprised    2 thanks

High Octane | | Permalink

I’m actually surprised that the number of unresolved enquiries is so low given the amount of time such companies take to respond to even the simplest of enquiries.

PK Group's picture

Jobs

PK Group | | Permalink

In my opinion, one of the most worrying sections here is: "Since 2005 HMRC has cut more than 37,000 jobs, according to the Public and Commercial Services Union. HMRC plans to cut an additional 10,000 jobs by 2015."

If this is the case, it definitely stands to reason that this could become a bigger problem in 2014.

HMRC Large Business Enquiries    4 thanks

ptwalkerimpeng | | Permalink

As a former HMIT in the Large Business Office [ as was] I have been at the cutting edge of the matter. Enquiries are not usually taken up lightly, we all had to be accountable for the time/risk analysis. It is right, in my experience , that decisions should  be made as soon as reasonably possible, but this requires common sense on both sides. I often found delays by either in-house tax departments or their agents was a ploy to pressure a case worker to settle for less. There was however 'political' pressure also from HMRC management, who were ever aware of external opinion.

There is pressure from different factions to get results. But what constitutes a correct result? Lots of quickly concluded enquiries? The accountancy profession , in my experience, often believed intransigence worked in their favour, truth was highly subjective!

What I found worked well was a genuine respect between the tax professionals on either side, built up over time and founded on the fairness and [ yes it's strange to say] the honesty/ integrity  that was a feature of the regular contact of reviewing the accounts and information in support of them .We are all human, and so we tend to deal with those we have come to professionally respect in a better way than with those who we believe have 'conned' us or used dubious delaying tactics previously.

It's not all roses for agents or tax departments either, there were many a time when the group company finance directors were either too busy or not too bothered to provide timely information.

So, from my experience, it's all down to reasonableness. Am I too nostalgic? Maybe, but wouldn't it be better all round if the culture was like that.    

carroccio1958's picture

bossi1958

carroccio1958 | | Permalink

In the past few years, Hodge and tax campaigners have criticised HMRC for making “cosy” deals with big business;

WOT ??? LIKE STEMCOR ????!!!!

Play for Time

John Wheeley | | Permalink

When I was training, I remember one partner who deliberately dragged out an enquiry, knowing that the HMIT would retire/move on and that he would then win the case.

Is 3 years really that unacceptable    3 thanks

The Black Knight | | Permalink

Is 3 years really that unacceptable in a complex case?

A simple enquiry takes 6 to 12 months when they don't find anything.

As usual politicians demand satisfaction using the only measure they can understand.

How anyone with no tax knowledge can judge HMRC's ability to negotiate with large business based on how long it takes and how much is collected is beyond me.

Whatever happened to the right amount of tax according to the law.

There cannot be too many experts on the subject beyond those actually negotiating.

Political pressure amounts to a spanner in the works. No wonder nothing ever gets resolved.

Sound Bites from PAC    1 thanks

Ian McTernan CTA | | Permalink

Every week or so we get another sound bite from the PAC whose sole mission in life seems to be to have a go at HMRC whilst not actually doing anything constructive.

Three years for a complex case is quite normal, and trying to score publicity points for highlighting the number of cases that are this old just shows how little the PAC, led by Margaret 'soundbite' Hodge, actually know about how these things work in practice.

For large cases, almost everything has to be reviewed at board level, legal opinions are frequently sought and everything has to be considered on the basis of 'if this ends up in Court' due to the large sums involved.

I'd be more surprised if cases were solved in less than 18 months!

I think the bigger problem is the lack of Inspectors on smaller cases these days, and lack of review of a lot of the work done on smaller enquiries (one case I had on small business taxes, the 'supervisor' had no relevant experience at all!).

HMRC need more staff, better IT and proper co ordination between departments and systems, as well as one reference number for a business entity rather than separate ones for CT, VAT, PAYE, etc - just make a 10 digit number then add A for CT, B for IT, etc and have one account into which it all goes.  If you want pointers on this, the Irish have a similar system.

I move for a vote of no confidence in the PAC    4 thanks

The Black Knight | | Permalink

I move for a vote of no confidence in the PAC.

These are important matters and should not be left to nincompoops.

You are quite right about smaller enquiries too. They don't seem to have the first clue about what they are doing, basic tax law or where to find what they are looking for. If anyone has told them what that is.

The result will be that they run the honest around in circles asking really stupid questions based on their lack of knowledge while the evaders will get an easy ride.

HMRC inspectors used to be held in high regard, they knew what they were doing and battles were worth having. Now I feel like I am an unpaid teacher. Not that they take any notice of the lesson.

 

Classic

malcolm141 | | Permalink

It's the 80:20 rule...I wonder of 80% of the tax comes from 20% of the investigations/inspectors?

Accountants North London

Susan Frank's picture

I am on the side of HMRC    2 thanks

Susan Frank | | Permalink

I am on the side of HMRC (sort of) . The majority of experienced HMRC staff saw this coming over 10 years ago most of whom  left when offered a way out  - no-one can deliver expected results with 'baby' inspectors,  and by that i mean newly qualified inspectors with no experience of real taxes and no common sense.

I fought   for  over 3 years to get 'someone' in HMRC  to read operational procedures when some one is declared bankrupt  - eventually 'someone' agreed I was right and that HMRC had made a big boo boo - ( in their defence it was a £20,000 boo boo - but most certainly not payable) This was a simple problem - throw in an investigation - baby inspectors, no common sense or real knowledge of taxation  and here we are today living with the consequences.

 

 

Staff leaving    1 thanks

Tromdo | | Permalink

It's not just about staff leaving to go to other firms, it's the fact that so many are/have retired, & not been replaced, so HMRC are now frantically trying to replace them but there aren't enough people to mentor the new people AND get the day job done.

comment    1 thanks

The Black Knight | | Permalink

"Tax avoidance by large companies is a national disgrace. HMRC should publish the names of every company it is investigating."  - Stephen McPartland, Conservative MP for Stevenage

 

 

 

 

Does any one else think a comment like that shows a total disrespect for the law?

carroccio1958's picture

respect for the law    1 thanks

carroccio1958 | | Permalink

YES I DO BLACK KNIGHT .

BUT AS WE ARE DEALING WITH A FRATERNITY WHICH AT BASE IS NO BETTER THAN A COLLECTION OF ROGUES VAGABONDS BRIGANDS AND THIEVES NEITHER THE SOURCE NOR RATIONALE FOR SUCH A COMMENT ARE SURPRISING IN THE LEAST .

johnjenkins's picture

Tax Avoidance is legal    1 thanks

johnjenkins | | Permalink

Mr Tory MP. As an MP it is a disgrace that you do not know this. Then again we know that those in power have no common sense any more and rely on stupid comments to see them through.

Anybody who has been through an investigation will know some take two minutes to sort out, some take years. There is no hard and fast rule except "get as much money as you can out of ""customers""".

Disgrace it is indeed

The Black Knight | | Permalink

johnjenkins wrote:

Mr Tory MP. As an MP it is a disgrace that you do not know this.

Disgrace it is indeed. I wonder if any of them have any brains.

Which leads me to ask who's flying the ship?

Large Business Enquiries

HUGH W DUNLOP | | Permalink

They are certainly not slow at chasing small one or two man businesses. Perhaps the amount of time spent on checking hundreds, if not thousands of small businesses, would be more cost effective if spent on investigating large businesses.