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HMRC wants to claim county court costs from defaulters

HMRC wants to claim county court costs from defaulters

At present, HMRC cannot claim costs from people when they take them to county court to recover unpaid taxes. But if it gets its way, that will change as from next April.

Up until April 2010, the Revenue had lodged 10,905 cases against people, including limited company contractors, who had not settled their tax bills and it is now asking for the court costs to be tacked on.

A lot of business groups and advisers are behind the move, but they want to see safeguards included. The main concern is that any changes to the current regime will not add court costs onto the existing debts of people who are genuinely not able to pay.

Bodies such as the FSB, PCG and Chartered Institute of Taxation say it would be inappropriate for the Revenue to be awarded costs in cases where a taxpayer is in real hardship or if the case involves tax credit overpayment.

Business groups only want reasonable and genuinely incurred costs to be included in the awards, but not the cost of HMRC wages. They also warn against basing the award based on the percentage of the sum contested.

With the current system, the state covers some costs but the taxpayer has no right to costs. There are concerns that people who feel they have a genuine grievance against the taxman will be discouraged from proceeding if costs are likely to be awarded to the Revenue.

An HMRC spokesman said that they were not trying to force people into further debt, merely recover what is legally owing to them from taxpayers who have the funds to pay. The taxman does not knowingly pursue court action against somebody he knows cannot pay.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Banged Up Abroad by Amy McTigue

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