From the date of formation, 2005, until April 2010 HMRC had launched a total of 10,905 cases in the county court against taxpayers who had failed to pay tax.
HMRC now, from April 2011, want to be able to add on court costs.
However, tax advisers across the country feel it is highly inappropriate for HMRC to pile on costs to those who are indisputably unable to pay or in actual hardship.
If HMRC do gain the right to claim costs, they should be kept to a minimum. Costs covered should be reasonably and genuinely incurred and costs of covering HMRC wage costs should not included.
There are concerns, however, that even if a taxpayer believes they are NOT wrong, HMRC being able to claim costs could deter them from defending themselves.
Whilst HMRC claim they only take court action as a ‘last resort’ and they ‘don’t want to push people further into debt’ they believe that some taxpayers take gamble.
HMRC think that some taxpayers will wait to see if HMRC take them to court as they know that they won’t have to pay the court costs.
In fact, it is cheaper to default HMRC than it is to default on any other creditor.
The reason that HMRC, in England, Wales and Northern Ireland, cannot claim court costs is because the person presenting the case is usually a staffer and not a qualified solicitor.
HMRC are intending to continue their discussions with the Ministry of Justice in order to see how these changes could be implemented.