HM Revenue & Customs (HMRC) is losing 60% of appeals against its VAT decisions because it is under pressure from the Treasury to take a more aggressive approach, according to a law firm.
The Telegraph reports HMRC figures show that in 2011-12 the taxman handled 30,000 appeals from businesses about VAT penalties and cancelled more than 18,000 after reviewing the evidence. Law firm Pinsent Masons obtains the statistics.
Pinsent Masons head of tax Jason Collins said: "HMRC is operating under a lot of pressure to increase its revenue and this pressure is particularly acute in VAT.”
The Telegraph said HMRC was already under fire from the National Audit Office over its VAT record. Adding its management had been criticised for allowing unpaid VAT to build up to £9.6bn out of an estimated total of £32bn in unpaid tax.
Collins added that losing 60% of VAT penalty appeals appeared to show HMRC "may have become overaggressive in hunting for cases of VAT evasion".
HMRC rejected the “aggressive” charge and pointed out that most of the penalty reviews involved late filing penalties, many of which are issued automatically, the report added.
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