HM Revenue & Customs faced a record 90 judicial review applications in 2016 as more taxpayers are challenging its decisions.
According to law firm RPC, this is an increase from 76 applications in 2015 and 42 in 2014. Some of the applications represent claims by several thousand individuals.
RPC says the increase in applications reflects concern in the tax profession about the misuse of powers HMRC has gained in recent years.
Those powers include issuing accelerated payment notices, intended to combat “abusive” tax avoidance. The notices mean HMRC can request full upfront payment of disputed tax within 90 days without any right of appeal.
It has issued more than 70,000 of the notices so far, which RPC says has brought in more than £3bn in extra tax revenue.
Applications for judicial review have also been submitted in other areas including conduct notices, residency of taxpayers and the reclaiming of incorrectly charged VAT.
RPC says HMRC is also under intense political pressure to increase tax yield, which might also be contributing to the increase in judicial reviews.
RPC partner and tax disputes head Adam Craggs says: “HMRC has a duty to act fairly and lawfully, but more and more taxpayers are finding that it is falling short of the mark.”
Craggs says: “With the new powers it has gained in the last few years, it is important that HMRC exercises its powers in a reasonable manner. HMRC has also recently been criticised by judges in judicial reviews for not co-operating fully by disclosing documents that might damage its case.”