Law firms are slamming the taxman’s "inflexible bureaucratic approach" amidst reports HMRC takes an average of nearly three years to investigate larger businesses.
Figures from law firm Pinsent Masons, showed HMRC’s investigations into large companies took 34 months on average in the year to the end of March 2017, up from 31 months in the previous financial year.
Miles Dean, managing partner of Milestone International Tax said tax inquiries are becoming more complex and the need for specialist staff can add months to an investigation.
"This slowdown is exacerbated further by an atmosphere of heavy governance, as well as the increasing number of inexperienced enquiry staff who will take longer to deal with issues," he said.
"With HMRC's inflexible bureaucratic approach to enquiries that are increasing in complexity, coupled with scarce specialists and lower levels of experience in their front-line compliance staff, it's no surprise that matters are taking longer to settle."
Pinsent Masons partner Ian Hyde said many of the challenges from HMRC were concerning routine tax issues, such as capital allowance claims.
He expressed concern that HMRC’s ‘litigation and settlement strategy’, the framework it follows when working on tax disputes, makes it hard for teams at HMRC to back down and settle disputes for less than the full amount of tax that was initially claimed.
"Even if HMRC has a weaker case, the litigation and settlement strategy encourages them to give no quarter. Cases are therefore being fought to the end despite growing costs on both sides," he said.
"HMRC’s and perhaps more importantly, individual officers’, priority seems at times to be to avoid being seen to be 'doing deals' with large corporates. This means HMRC is digging its heels in and not backing down, even when there is a sensible settlement to be reached."
