Executive summary

The purpose of the study is to investigate whether (and if so, why) avoidable disputes are arising between businesses and HMRC as well as why delays occur between the opening and closing of enquiries.

The study combines survey and interview data, as well as the previous literature. Based on all the data available to us, we raise some issues of concern that require further consideration1 . It is clear that the complexity of large businesses, combined with the need to apply rules concerning international taxation, means that disputes will be inevitable. However, we consider ways in which disputes might be reduced and the length of time during which they are outstanding be shortened. 

Should HMRC be required to publish annual statistics on the number of open enquiries and the average age of open enquiries?2 As HMRC is already considering3 , there might be merit in introducing more stringent rules applied to enquiries such as default rules as to when enquiries must be closed (subject to an HMRC application to the First-tier Tribunal)?

We raise the question of whether, in some cases, disputes may arise because HMRC officials are not provided with sufficient technical training and whether Customer Compliance Managers (CCMs) lack sufficient understanding of the businesses themselves (which continuity in the CCM role would mitigate)?

Issues around expertise and the subject matter of the dispute will also cause delays to occur between the opening and closing of enquiries (the second research question). Governance will certainly play a role. Whilst it might be frustrating for taxpayers that these layers of governance do exist, they were introduced in response to particular concerns about the potential for cosy, sweetheart deals. These layers of governance also ensure consistency of treatment across taxpayers. To that end, the rationale for governance constraints is sound. Furthermore, it should be acknowledged that taxpayers and the tax authority face differing objectives when it comes to resolving disputes

But what might assist is better communication with taxpayers as to how the governance process works. Could this be an aspect of a broader potential change which would involve wider use of mediation training for CCMs? Would it be useful to consider whether taxpayers could be involved (in some way) when issues are being escalated through the higher layers of governance? Are there lessons which could be learned from the experience of the High Risk Corporates Programme (HRCP) which could be applied more generally to disputes?

There are relatively few formal rules governing the relationship between HMRC and taxpayers, and enquiries can be opened for any reason (within defined time limits). This appears to result in the elongation of the period between the opening and closing of an enquiry. There are several questions that might be asked. Should some thought be given to the suggestion that questionnaires be designed as bespoke for taxpayers rather than being pro forma? More fundamentally, is it the case that HMRC officials cannot communicate clearly to taxpayers why information is being requested because they are disincentivised from taking a position? 

Finally, the report finds that the cooperative compliance framework is achieving its desired goal in highlighting issues in real time, whilst the litigation and settlement strategy was not seen to be a major cause of delays.


  1. 1.

    As a result of the shortcomings in the interview and survey data, the report findings are based on a combination of data.

  2. 2.

    Also recommended by the CBI: CBI (December 2018), In need of a reset: HMRC’s relationship with large business, p. 3.

  3. 3.