The taxman might like to give the impression that it doggedly pursues all offending individuals and refuses to ever accept that it might be wrong, but it appears that that is not the case. HMRC has just given up after spending three years attempting to bring one of its own PSCs to court.

HMRC had been investigating GMPFive Consulting Ltd for contracts that the company held with the tax body itself. The status inspector had also been involved in the Jensal Software Ltd dispute, in which the official chose to investigate Jensal twice and lost on both occasions.

Not content with having lost this case, the inspector then went on to investigate GMPFive Consulting Ltd, operated by contractor Gary Philpot. He was surprised to learn that he was under investigation, as the contracts that he had been working on were for HMRC. Philpot’s company was also responsible for HMRC’s IT test management services for its Foreign Tax Compliance Act, as the tax body did not have the expertise itself.

To try and force the case, the inspector held a teleconference call with other HMRC officials. Some of these officials seem to be abusing their power by pursuing cases without any objective assessment of whether they can win the case or not.

Philpot sought a review of his case to try to avoid going to a tribunal, but the review merely upheld the conclusion of the tax inspector. Finally, Philpot lodged an appeal with the first-tier tribunal. After a period of a few weeks, HMRC simply dropped the case.