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HMRC are to apply a more consistent approach to the collection of debts in litigation; payment of tax will normally be required in all such cases.
This change will take effect in relation to all decisions made by the tribunals and courts on or after the first of next month.
Currently, where a tribunal or court has found against the taxpayer but there is a further appeal, the taxman must repay overpaid tax where there is a judgment in favour of a taxpayer, even though that judgment is subject to appeal.
However, where the Revenue has a judgment in its favour it does not consistently collect the tax before the appeal is heard. A party to litigation is legally bound to accept the judgment of a tribunal or court, even though they may be appealing against it.
HMRC will not enforce payment in cases where an agreement not to do so had been made with the appellant before 9 December 2009 (the date of the PBR in which the Chancellor announced the new, uniform approach). Nor will the department require payment where to do so would be likely to drive the taxpayer into liquidation or bankruptcy.
Where there is a judgment in favour of a taxpayer, HMRC must repay overpaid tax, even if that judgment is subject to appeal.
For more details, see here.
