Enforcement of judgments in litigation
HMRC has announced that it is to apply a new approach to the collection of debts where a dispute is being appealed through the courts.
Who will be affected?
At present where a tribunal or court has found against a taxpayer but there is a further appeal, HMRC must repay overpaid tax where there is a judgment in favour of a taxpayer, even though that judgment is subject to appeal by HMRC.
However where there is a judgment in HMRC's favour, HMRC does not always collect the tax before the taxpayer's appeal is heard. HMRC has decided to move to a new approach, under which payment of the tax will normally be required in all such cases.
The change of practice will take effect in relation to all decisions made by the Tribunals or the Courts on or after 1 April 2010.
The detail underlying this announcement is awaited. In particular, it is not immediately clear what safeguards will be in place to protect taxpayers who are appealing against a judgement if immediate collection proceedings are pursued by HMRC. Moreover, clarification is required as to how this will be applied across all taxes administered by HMRC.