Just how big is the bill faced by the UK's tax authority to compensate businesses which claim they have overpaid to the tune of millions of pounds in cases dating back decades?
At issue is HMRC's own disclosure, buried in annual accounts published last month, that it has increased both the amount it expects to have to pay out and a bigger total it is less convinced it will need to repay, but which reflects the compensation being claimed in ongoing proceedings. The Mirror says there are "dozens of cases" with businesses such as "retailer Littlewoods, tobacco group BAT and insurers Prudential".
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None of the cases involve tax avoidance – Littlewoods's £1.2bn claim, for example, is for compound interest related to 30 years' worth of overpayments on VAT.
HMRC's "provision… for more likely than not outcomes" rose from £5.4bn to £7.2bn over the year to March, after £2bn of new costs were included and £200m in settlements was paid. HMRC will probably lose cases related to this amount and pay out sums over the coming years as decisions are handed down. The FT says the Government has allowed for costs of between £500,000 and £2bn a year, which it hints may not cover eventual costs.
On top of this a total of £35.6bn, up from £29.2bn, is at stake in cases worth more than £100m. A spokesperson for HMRC said: "There is no question of this amount or anything close to this amount ever being repaid as the figure is based on our losing every single case currently being litigated, which is not going to happen." The watchdog says it wins around 80 per cent of cases that go to tribunal.
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