Could HMRC be forced to repay up to £43billion in overpaid tax by the courts?

Ever thought that you might be due a tax refund? It’s an issue that has vexed many companies over the years, though few have ever had their wishes fulfilled. However, things might be about to change if the news coming out of the Association of Chartered Certified Accountants proves to be correct. It claims a number of firms who are currently locked in dispute with HM Revenues & Customs could be due a refund of up to £43 billion should their legal cases succeed.

So what’s this all about? Well, HMRC is in dispute with several big businesses who claim they have paid too much tax over the years: in some cases decades. If it loses these cases, accountants claim that in a worst case scenario the Revenue could end up refunding up to £43 billion.

Where has this estimated figure come from? Well, the figure was actually revealed in HMRC’s latest annual accounts. Amongst the many big businesses which are pursuing long-running action against HM Revenues & Customs is mail order firm, Littlewoods, who claim to have overpaid on commission sent to agents between 1973 and 2004.

Speaking about the staggering estimated bill that HMRC potentially faces, Chas Roy-Chowdhury, of the Association of Chartered Certified Accountants, said:

“This is the absolute worst-case scenario for payouts but, as HMRC takes an increasingly aggressive stance on tax collection, it could find itself facing growing numbers of legal challenges – and paying out more refunds.”

“The amount it has to set aside in provisions will have to get bigger as they play hard ball with companies and taxpayers and then face more court battles. Sometimes they will get it wrong.”

What has HM Revues & Customs had to say about the matter?

Well, according to HMRC accounts, £7.2bn of the £42.8bn potential tax refund bill is likely to be paid out than not. However, the remaining £35.6bn in the estimates HMRC is labelling as mere ‘contingent liabilities’- that is ‘debts’ where a refund is possible rather than likely. However, it’s interesting to note that this ‘contingent liabilities’ amount rose by 20 per cent in the last 12 months.

HM Revenues & Customs has done its best to play down the apparent refund crisis, stating that they win 80 per cent of cases that go to tribunal and that many never even reach that stage. It claims, therefore, that any refunds handed out will only be small, and will not come close to the suggested overall figure of over £35 billion. A spokesperson for HMRC said:

“We are required for accounting purposes to include an estimated contingent liability figure of potential repayments of tax.”

“There is no question of this amount or anything close to this amount ever being repaid, as the figure is based on our losing every single case currently being litigated, which is not going to happen.”

If you feel you have overpaid tax and believe that you, too, might be due for a refund from HMRC, then contact Steven Glicher accountants on 0161 485 8007 or email

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