HM Revenue & Customs have released a statement concerning the amount of money it will have to pay out, if it loses its current battles with taxpayers.
The tax office had to calculate the amount in order to figure out how much it may need to pay out to tax payers throughout the UK. However, they believe that they will not have to pay out the full £55bn that they have calculated. A spokesperson for the tax authority has stated that they believe that one tenth of disputes currently being investigated will be lost by the claimant, meaning that HMRC will not have to pay out. They also stated that the number that has been calculated by the HMRC is merely a top figure estimate, and that it will definitely not be the amount of money paid out at the end of the year.
However, the potential liabilities for the HMRC are still rising, meaning that the number of payouts that the office could be liable for is still rising, despite the release of the earlier figure. Therefore the tax office may have to pay out more than it has anticipated.
This all comes after the brexit vote, in which campaigners criticised hundreds of cases of multi-billion pound claims from multinationals, that used EU law to argue that they wrongly paid tax. Their hope is that leaving the EU will restrict these claims. As the HMRC is governed with EU case law, it will take approximately two years since leaving the EU to create new case law, and law to govern the HMRC in cases against taxpayers. However, brexit campaigners believe that this is the way forward in terms of a better future for the HMRC and the UK government.
Tax disputes account for 1/6th of the government’s future liabilities, and HMRC has tried to reduce the amount of payouts from their fund by adding a 45p charge on the interest on tax refunds. This means that if your claim has gained interest since you made it, then you will be taxed on it. If your claim lies in the billions, your tax could be over 1 millon.
It’s uncertain when the UK will leave the EU, however it is certain that a lot of UK law will change – including the laws that govern HM Revenue & Customs. It will take approximately 2 years to reset and re-write laws to govern things such as tax return to tax payers from the HMRC.