• Register
Return to: Home > News > Advisory > UK tax investigations taking longer to settle

UK tax investigations taking longer to settle

HMRC’s tax investigations into large businesses are now taking more than three and a half years to settle, reaching a record 43 months in 2018/19, up 10% from 39 months in 2017/18, according to a report by law firm Pinsent Masons.

Pinsent Masons partner Jason Collins said: “Businesses need certainty to plan efficiently – putting them in legal limbo for years on end undermines that certainty.”

HMRC’s strategy for dealing with tax investigations can work against reaching a quick resolution of an inquiry. The ‘Litigation and Settlement Strategy’ (LSS), which was designed to resolve tax disputes with a consistent framework, makes it difficult for individual HMRC teams to settle disputes for less than the full amount of tax initially identified by HMRC as potentially underpaid.

Collins said: “HMRC’s inflexible approach to tax avoidance is driving delays as it frequently aims to win every point against the business. This can make it difficult to settle even the simplest disputes.  It can lead HMRC to deploy its resources inefficiently.”

Pinsent Masons says, one reason for the length in time taken to resolve disputes could be that HMRC is increasingly pursuing complex tax investigations with a cross-border element, which typically take longer to settle.

Collins added: “HMRC’s latest disclosure facility shows that HMRC is clamping down on what it views as businesses diverting profits from the UK though aggressive, out of date or erroneous transfer pricing.  It gives those businesses a window to fix the past in line with HMRC's thinking without the need for an HMRC investigation. In order to avoid being tied up for years in a dispute with HMRC many businesses may opt to take this route.

"HMRC is devoting significant resource to investigating large businesses it suspects of diverting profits from the UK and already has a number of businesses in its sights. All cross-border businesses need to check their transfer pricing policies reflect what actually happens on the ground."

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.