Vale & West Chartered Accountants Blog

Time taken to settle HMRC tax investigations reaches record length

The length taken to settle HM Revenue & Customs (HMRC) tax investigations reached an all-time high in March 2019.

The average length taken to resolve a tax dispute rose by 10 per cent to 43 months, which is four months higher than the average length taken in March 2018.

In 2017, reports found that HMRC had increased the number of cases taken up against large businesses, with the tax authority believing that almost £6 billion in tax had been underpaid in relation to transfer pricing.

Subsequently, HMRC has seen the number of cases increase while also contending with their strict litigation and settlement strategy. The strategy aims to provide consistency across all tax investigations that are undertaken by HMRC.

Experts believe that the strategy means that investigators find it challenging to settle for less than the full amount, which can result in tax investigation cases taking much longer to settle.

The length of time taken has increased by seven months since 2017, when HMRC began investigating more large businesses, with the belief that many companies are diverting profits from the UK through transfer pricing that is outdated or flawed.

HMRC said that Revenue challenges on large businesses are undertaken to ensure that all tax that is due is being paid correctly.

HMRC commented on the increased length of time it is taking to complete tax investigations, as a spokesman said: “Over 85% of our investigations conclude within 18 months but some cases are more complex and so will take longer to resolve and even require us to litigate.”

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