Over half of North West businesses (52%) say they are currently involved in a tax dispute with HMRC which has lasted more than one year. Tony McDonough reports.

Those figures are according to a new survey from accountancy and business advisory firm BDO.

BDO has offices in Liverpool and Manchester, and announced 39 promotions across its North West operation in May.

A survey of more than 500 mid-sized businesses has highlighted the difficulties businesses face navigating the UK’s complex tax system.

The delays also reflect concerns around HMRC’s resources and its ability to swiftly respond to and resolve taxpayer queries.

Businesses engaged in formal legal disputes with HMRC currently face a long wait for resolution.

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HMRC’s latest annual report shows there were 39,500 tax tribunal appeals ongoing on 31 March 2023, an 8% rise on the previous year.

For large businesses subject to an HMRC enquiry, the average length of time taken to settle an enquiry – including those in litigation – is 36 months.

The firm is therefore urging businesses to consider Alternative Dispute Resolution (ADR) routes to resolve tax issues.

Partner at BDO and head of their tax risk team, Lucy Sauvage, said: “The UK’s tax system can be very complex and difficult to navigate, so it’s no surprise that this can result in business tax disputes. Simplifying and modernising the system would certainly help to reduce these difficulties.

“There is also a strong argument for giving HMRC more resources which would enable it to offer a better service to small and medium-sized businesses, the vast majority of whom simply want to pay the right amount of tax.

“Cases in litigation can significantly increase the length of time an HMRC enquiry takes to resolve. Many businesses would, therefore, do well to explore the option of Alternative Dispute Resolution at an early stage. HMRC seeks to conclude the ADR process within 120 days which is a far shorter timescale than would otherwise be the case.”

Craig Aspinall, associate director at BDO in the North West, added: “With 87% of ADR cases concluding in resolution this is an important and valuable tax dispute resolution tool. However, the later ADR is considered, the higher the risk of wasted time and high costs associated with an unnecessarily protracted dispute.”