HMRC successful in 86% of FTT tax cases

HMRC successful in 86% of FTT tax cases
HMRC’s success rate in First-tier Tribunal (FTT) tax disputes rose to 86% in the year to 31 March 2021, up from 82% in 2019-20 and 75% in 2018-19, according to the latest figures.
However, the success rate was only 40% for the five cases that made it as far as the Supreme Court. It was 83% in the Upper Tribunal and 83% in the Court of Appeal, according to Pinsent Masons, which uncovered the figures.
Jake Landman, a tax disputes expert at the company, said: “HMRC’s increasing success rate indicates that taxpayers should only take HMRC to a tribunal or court as a last resort.”
HMRC counts cases as a success if the decision is in its favour or if it succeeds on substantive elements of its case.
“If possible, taxpayers should look to settle tax disputes outside of court through alternative dispute resolution (ADR) or resolve them in the most favourable way possible during HMRC’s enquiry process,” Landman said.
“The statistics suggest you need good grounds to litigate with HMRC. That said, there will be cases where the taxpayer has to litigate to get the right result even if the process can be costly and time consuming.”
The figures include decisions issued in 38 cases involving or related to tax avoidance. Of these, 35 were decided wholly or partially in HMRC’s favour, protecting tax revenue of around £1.7 billion.
The number of tax disputes heard by tax tribunals dropped to 1,052 in the year to 31 March 2021, a 45% decrease from the 1,907 the year before. This was because face to face hearings were cancelled at the beginning of the Covid-19 pandemic and it took time to roll out video or telephone hearings more widely.
Appeals to the FTT that are not stood behind a lead case are typically resolved within 12 to 18 months, according to HMRC’s annual report and accounts.