HMRC's backlog of outstanding tribunal cases has doubled in four years, reaching a record high of 26,965, up from 24,273 the previous year.

And the delays in settling disputes in areas such as VAT, is also proving costly for business - in terms of time and money - for the duration in which cases are not resolved.

'Delays also create huge uncertainty for those who are just trying to get on with the day to day running of their businesses,' said Jason Collins, head of tax at Pinsent Masons.

He said that delays in settling VAT disputes are particularly costly for the businesses involved. This is because while the disputed tax is often 'postponed' pending an appeal to the Tribunal in most cases, VAT must normally be paid upfront and then recovered afterwards if successful.

'Paying large amounts of VAT which will sit in limbo for many months is likely to put incredible strain on a company's cashflow. For many businesses already struggling to cope with the impact of the recession, whether from reduced trade or constrained bank lending or both, this could be life or death,' he said.

In addition, businesses and individuals who are able to postpone their tax payments until the case is heard could incur potentially hefty charges for delays, as HMRC charges taxpayers up to 3.5% on underpayments but pays just 0.5% interest on overpayments.

A sharp increase in outstanding cases in the last few years has forced HMRC to soften its litigious approach towards those it believes are not paying the right amount of tax - revising its Litigation and Settlements Strategy in 2012 which sought to 'encourage HMRC staff to minimise the scope for disputes and seek non-confrontational solutions.'

'It will take time for the HMRC's change of attitude to filter through, but nevertheless HMRC could be doing even more to reduce the amount of litigation it embarks on and take a still more flexible approach.

'The fact that HMRC has recently opened up the door to Alternative Dispute Resolution (ADR) is a very positive move, but it's not going to solve everything. HMRC itself needs to be far more willing than it currently is to instigate constructive negotiations with taxpayers with a view to achieving sensible settlements. It still has a long way to go to establish workable ways to recoup tax without entering into so much costly legal wrangling,' said Collins.