Taxpayers are contesting a record number of cases with HM Revenue and Customs which is leading to a bottleneck in the tribunals systems.
The number of cases queued up and waiting to go before tax tribunals has doubled in the past four years.
Almost 27,000 cases are in the tribunal pipeline – which would take around 14 years to clear at the current rate of hearings that take place.
The latest available figures for 2009-2010 show 1,395 cases were heard in the tax year. HMRC won around 900.
HMRC argues the backlog is on paper only.
Alternative resolution
“Many of the cases are linked and many are settled before going to a hearing,” said a spokesman. “If the cases are linked, the pipeline can shrink quickly on the result of a single case.”
The New Alternative Resolution Service introduced recently is a tool HMRC hopes will reduce the pipeline even further without the need of taxpayers appealing to a tax tribunal.
The service allows an independent HMRC case officer to arbitrate – but if the taxpayer still disagrees with the decision, they still have an option to take their gripe to the tax tribunal.
HMRC has run a small ADS scheme for two years and views the results a success.
However, the scheme has limits, with a number of exclusions like tax credits and PAYE.
Richard Summersgill, HMRC director of local compliance, said: “HMRC is pleased that the alternative dispute resolution is now available to every small business and taxpayer.
“Trials have shown us that the scheme performs well and is liked by taxpayers, who can settle disputes quicker and without the time, cost and hassle of resorting to a tax tribunal.”
Britain is not the only country with a backlog of cases queued up for tax commissioners.
Germany has millions of tax disputes
The German Finance Ministry has revealed more than 4 million appeals against tax assessments are outstanding – a 14% increase in just a year.
The number jumped from 3.53 million at the start of 2012 to 4.14 million at the end of the year.
During the year 3.56 million files were dealt with and closed – down 12% compared to the 2011 figures.
Thomas Eigenthaler, who chairs the German tax union DSTG, described the backlog as “not a problem”.
He explained the delays in settling cases were mainly due to hold ups in the legal system, with the courts considering rulings on millions of cases.
Under German laws, courts must rule on tax matters like setting off medical expenses and child care costs, the level of pension contributions, and inheritance tax due.
