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Large business tax investigations taking longer to settle

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The average length of time HMRC takes to settle tax inquiries into large businesses has risen to more than three years, according to figures obtained by Pinsent Masons. The average of 39 months in 2017/18 was up 15% from 34 months in 2016/17.

HMRC is now focusing on more complex cases and is increasingly unwilling to back down over technical points. Pinsent Masons sees this as a facet of the ‘all or nothing’ approach of HMRC’s litigation and settlement strategy. This can make it difficult for individual teams at HMRC to settle disputes for less than the full amount of tax initially claimed.

Steven Porter, Partner at Pinsent Masons, said: ‘Businesses face huge disruptions as HMRC continues to drag out even the most basic of tax disputes’.

While the duration of investigations has increased, the number of cases open at the end of the year fell to 3,302 in 2017/18, down from 3,617 in 2016/17, which suggests the increasing length of investigations is not due to HMRC taking on more cases.