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Negotiation's What You Need

TaxationWeb says negotiation is an integral element of dealing with the tax authorities.

There have been two 'big news' stories this week, namely HMRC To Investigate Government Contracts Paid "Off Payroll" which of course harks back to the Student Loans Company case from earlier this year, and HMRC "Big Business" Tax Deals Cleared by National Audit Office But Notes Lack of Tax Expertise; it is the second of these that I wanted to linger on.

I am pleased that the NAO has effectively approved HMRC's approach to negotiated settlements - at least, insofar as the five cases selected for review. It may be unpalatable to some but negotiation is a vital part of dealing with HM Revenue & Customs, whether it is trying to get tax relief for less-than-perfect expense documentation, or arguing over whether profits are taxable at all.

Some time ago, HMRC adopted a much more adversarial stance when it came to disagreement over tax treatments: they would take cases to tribunal even when there was no more than a 50 : 50 chance of winning, which put many taxpayers in an impossible situation, given the costs potentially involved. It also generated a huge backlog of tax cases to be heard at tribunal - and HMRC stretched to provide the resources to cover the demand it created. (See Tax Tribunals on the Increase - with thanks to Ian Hyde of Pinsent Masons). Fortunately, HMRC has now started to take a less confrontational approach as part of its overall strategy.

I am not saying that negotiation is a panacea: there are times when it is right for the taxpayer to take his or her case all the way to tribunal and, if necessary beyond. But there are many occasions where the cost of taking a case is prohibitive and meeting part-way is eminently preferable. I am generally in favour of giving taxpayers as many options as possible to suit them.

Regards all,

TWed