The Chartered Institute of Taxation (CIOT) has raised concerns with Parliament over the apparent eagerness of HMRC to resort to legislation rather than make concessions in cases where the likelihood of success is less than 50%.

The result of this behaviour is an increasing number of Tribunal cases. The CIOT suggested that a better course of action would be to use Alternative Dispute Resolution (ADR).

The CIOT recently backed HMRC’s Litigation and Settlement Strategy (LSS) in a letter to the Treasury Sub-Committee. The institute views it as a sensible framework for resolving disputes with taxpayers. However, members of the CIOT have complained that HMRC does not appear to be adhering to its own rules, which state that when HMRC believes that litigation is unlikely to succeed, it should drop the case.

The LSS states that listening to specialist advice early on in a case can result in important efficiency savings. The CIOT said that HMRC is not engaging its specialist technical staff, tax counsel or solicitor’s office before making decisions and causing disputes to arise.

In cases where HMRC officers undertake the advocacy, they are less likely make an objective assessment, thereby reducing the scope for early settlement or narrowing the issues in dispute.

Ray McCann, CIOT President, said: “Contrary to the LSS, our members report that HMRC seem to be taking increasing numbers of cases where the prospects of success appear much lower than 50%. Alternative Dispute Resolution (ADR) mediation can work well and needs to be promoted more widely as a mechanism for resolving disputes. ADR is effective when it is used genuinely to seek to resolve disputes.”