LSS redux

In 2007, the Revenue announced its Litigation and Settlements Strategy. Whilst launched with not so much of a bang but a whimper, the strategy has been rolled out by the Revenue and they are proving true to their word. The word being that, in the event of dispute over the application of the law, the previous, longstanding policy of negotiating a compromise settlement will be eschewed in favour of taking the dispute into the courts.

Whilst seeming reasonable at first blush, the strategy ran the risk of being flawed in many respects.

Whilst initially being feared as oppressive to the smaller taxpayers in terms of potential litigation costs, the Revenue has, in fairness, not obviously sought to use the strategy as a blunt tool with which to bludgeon the less well off taxpayer into submission.

But, conversely, being prepared to fight tooth and nail with the biggest of the corporates will continue to produce as many, if not more, unfavourable results for the Revenue than for the taxpayers in any number of big ticket disputes. One cannot help but think that the Revenue might have wished, in retrospect, that it had sought to reach a compromise on occasion rather than devote a great deal of resource to losing an argument and setting an unfavourable precedent.

The LSS is one of many initiatives by Dave Hartnett, currently acting chair of HMRC and, de facto, top dog. One ventures that most professionals engaged in tax work have a large degree of respect for Mr Hartnett. Whilst not always, and not often, agreeing with his point of view, he does, at least, have one and he is prepared to express it with some vigour. He has, further, worked for the department for most, if not all, of his career and has paid his dues whilst turning his back on a more lucrative career in the private sector.

It is, therefore, with some dismay that it is reported that the LSS is now taking up so much of the time of the senior Revenue technicians that outside help is now needed, with the Revenue engaging one, if not more, of the magic circle law firms to assist the Revenue. This seems a very non-Dave solution. After all, it is these same self-appointed masters of the legal universe that are responsible for so many of the ills elsewhere of which the Revenue complain ?

Hopefully, Mr Hartnett and his team will have a re-think, decide that they have made their point with the LSS, take their foot off the gas, refine their LSS policy and, thereby, avoid the need to indulge the overblown egos of these magic circle firms and pay vast sums of taxpayer money to them into the bargain.

The alternative, which would not only be less burdensome to the public purse but would also do everyone some good in the long run, is for Mr Hartnett and company to apply their not inconsiderable talents to a renewed examination of why there is so much uncertain law and, moreover, where it is coming from rather than who is acting upon it. After all, if the government could make a better job of legislating in the first place, there would not be the scope for litigation we now have. In years gone by, the laws were better drawn and there was no need for the explanatory notes which have been issued for all new laws since 2002. Indeed, the very fact that the laws themselves are not now capable of interpretation without extra help tells one all there is to know about the quality of modern law making.

With the past year being recognised generally as the worst ever for the quality of tax law, and one which will undoubtedly add to the litigation mountain, perhaps Dave should now be having one of his trademark frank exchanges with his political masters, rather than writing cheques with our money to the law firms.

Doubtless, whatever happens, Mike "rent a gob" Warburton will have something to say. The fiscal commentator of choice (just so long as you have the IQ of a retard) has chipped in with a predictably trite quote for this latest LSS development, complete with a reference to m'learned friends. One can only guess over whether he knows that the term is used not for solicitors, but only for members of the Bar, or whether he is happy to let a sub-editor write any old tat and attach his, and his firm's name, unchecked. Either way, it has become increasingly difficult to view Mr Warburton and his ilk of commentators as now being anything but an embarrassment to the profession. One rather wishes they would all shut up or, better still, they could set an example to their MNE clients by not just threatening to leave the UK, but actually going. As with their clients, it is difficult to envisage anyone missing them.