£9.6bn in tax expected to be repaid due to successful legal cases over bills

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More than £9.5 billion in tax is being repaid due to legal cases in which people successfully demanded their bills are reassessed, the public spending watchdog has found.

The National Audit Office (NAO) revealed the sharp rise in its report on the accounts of HM Revenue and Customs (HMRC). 

HMRC expects to have to repay £9.6 billion due to such legal cases for the period 2016-2017, a big increase from the £5.9 billion paid back in 2015-2016.

Some £1.8 billion has already been repaid for the year 2016-2017, the report said.

The NAO stated that payments depend on individual court rulings where taxpayers have disputed the interpretation of legislation.

HMRC also disclosed that separate contingent liabilities for legal claims where it considers that it is possible that it will be required to repay tax dropped in the same period.

Contingent liabilities decreased by 61.9% to £18.7 billion at the end of last March, this was down from £49.1 billion in 2015-2016.

The report stated: "This is due to revisions of estimates for cases currently in litigation, reduced likelihood of payment for certain cases, and cessation of litigation action."