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Tax-related disputes

People sat around a table - picture taken from above Print publication

28/05/2014

A powerful combination of factors has led to an explosion in tax-related disputes:

  • a tougher attitude from HMRC
  • a need for the government to raise more money
  • more complex legislation
  • broader drafted “anti avoidance” provisions reducing legal certainty
  • a more purposive approach to interpretation by the courts.

There are not only more disputes arising with HMRC but also more tax-related disputes between commercial parties where the risks and costs of a tax dispute are part of the make-up of a commercial relationship.

However, most tax disputes do not lead to formal litigation before the Tribunal or the court. An early grasp of the issues at stake and appropriate legal guidance, including a proper appraisal of the strengths and weaknesses of the parties’ positions, can often resolve disputes at an early stage. Where lack of certainty in the law means a more protracted dispute is inevitable, then relevant issues may include being, or not being, a “test case” and where appropriate creating groups of litigants to share the risk.

As with all disputes, the facts are critical, so an analytical approach to the whole picture is fundamental rather than adopting a “one size fits all” approach to a dispute. The nature of tax-related disputes varies enormously which is why we bring together a unique collection of expertise:

  • leading tax advisors
  • highly experienced commercial litigators
  • regulatory specialists
  • CEDR accredited mediators

together with (where appropriate) leaders in the fields of white-collar crime defence, and insolvency, as awareness of such issues can play a part in certain tax-related disputes.

Our specialists can advise on urgent issues such as managing an HMRC dawn raid as well as advising on any disclosures to make where there is an investigation by HMRC.

Owing to the increasingly complex nature of tax transactions our leading tax advisors and commercial litigators have the expertise to analyse whether there are grounds to pursue professional negligence claims against advisors.

Recent Cases

VAT

Following an enquiry by HMRC into the operations of a large vehicle-based business a dispute arose in relation to three aspects of the business: (i) the self employed nature of certain operators; (ii) the VAT treatment of certain suppliers to the operators; and (iii) the VAT treatment of charges for the use of credit cards made to customers. We quickly and successfully resolved the first two disputes and the third dispute is part of a wider challenge to booking fees where our client is sitting behind the “test case”.

Pension Schemes

A pension scheme used funds to purchase heavy machinery and was challenged by HMRC on the grounds this was tangible moveable property. Notwithstanding the fact (accepted by HMRC) that the legislation was not intended to catch such purchases HMRC imposed charges on both the pension fund and its members. These charges have been put on hold and a group of similarly placed pension schemes has been formed to take the dispute forward.

Tax Deed

In the context of a share sale the parties entered into an agreement for the buyer to pay certain amounts to the seller in respect of tax losses. To establish the nature of the obligation and the amount of tax losses involved it was required to have a thorough understanding of the documentation and negotiation as well as the analysis of the accounts and computations in order to reach settlement.

Property Dispute

The parties to a contract were locked in a dispute over various works to be completed and a key aspect was the significant VAT complications which needed to be addressed to enable resolution of the dispute.

Bonded Warehouse

Negotiation of a settlement with HMRC relating to penalties arising from a mis-declaration of textile goods imported into the UK.

Seizure of Goods

Administrative errors by import agents led to HMRC seizing commercially sensitive goods which they sought to destroy. The key to the resolution was commuting the sanction to a monetary penalty so as to enable the goods to be retained and avoid wider damage to the business.

Lost Development Opportunity

In a substantial dispute concerning a lost opportunity for property development a key issue was the lost CGT indexation and other allowances.

Compound Interest

Representing a substantial client in relation to its claim for compound interest on sums recovered from HMRC relating to VAT. This involves the Littlewoods Retail Limited v HMRC [2010] EWHC 2771 test case.

We have also dealt with SDLT disputes, Transfer Pricing investigations and Special Investigation matters.

The Team

Simon Concannon – Head of Tax

With over 25 years’ experience as a tax advisor Simon is recognised as a leader in the field of tax law and is ranked in the top tier in Chambers & Partners guide to the legal profession where he is described as being “immensely knowledgeable as well as good at tactics and strategy“.

Gwendoline Davies – Head of Commercial Dispute Resolution

Gwendoline is a highly respected litigator and is ranked as a leading individual in Chambers & Partners, where she “rightly has a good reputation” and is described as a “very talented lawyer and great fun to work with“.  She enjoys coming up with solutions and believes that her “sensible, intelligent and measured…Welsh fighting spirit” comes in handy as a litigation lawyer.  She is an accredited mediator with the Centre for Dispute Resolution, a member of the Chartered Institute of Arbitrators and a member of the International Bar Association.  She has worked with Simon in coming up with strategies to resolve tax disputes for clients. However, where this is not possible, she has pursued disputes through the court process.

Jeanette Burgess (nee Harwood) – Head of Regulatory

Jeanette Burgess has 18 years’ experience in dealing with contentious direct and indirect tax investigations including representing major international corporate and their directors in alleged fraudulent evasion of customs duty and EU quota sanctions investigations.

Malcolm Simpson – Litigation partner

Malcolm is an accomplished trial lawyer with 25 years’ experience of handling trials and appeals at all levels in the English courts. He is retained to advise a number of leading UK and global corporations on complex commercial disputes, many of which have tax aspects. In 2014, Chambers & Partners described him as “A strategic thinker as well as a good tactician,” and “a very calming force in contentious situations“; “somebody who gives a great deal of thought to the way the case needs to be conducted.

Contacts