In the run up to Christmas HMRC published two documents on tax disputes: A code of governance for tax disputes and a commentary on the litigation and settlement strategy. The documents can be found here.
It is good news that HMRC are publishing this information which will help taxpayers to understand HMRC's approach in a dispute.
If you're wondering why HMRC are focusing on the way that disputes with tax payers are conducted then this may be of interest.
The Code of governance document sets out the controls that HMRC have introduced to ensure that tax disputes are settled in a consistent manner and meet HMRC's objective of " efficiently determining and collecting the correct tax to maximise revenue flows, while reducing costs and improving the customer experience."
There is now a tax assurance commissioner who has a veto over any settlement where the amount at stake is over £100m and a sample of those disputes where the amount at stake is over £10m. The tax assurance commissioner and two other tax expert commissioners are the decision makers in cases with over £100m at stake and are advised by the Tax disputes resolution board.
For disputes with multiple cases, including transfer pricing there is an interlocking system of panels and boards to determine policy for the dispute to apply to all cases.
The document also sets out a process for reviewing settled cases to ensure that the new procedures are working in practice.
Clearly consistency of approach is a good thing for tax payers but the other side of the coin may be that it takes longer to settle disputes due to the need to get buy in from panels boards and commissioners before HMRC can sign off.
The commentary is really a HMRC manual on how staff should apply the Litigation Settlement Strategy and work with all the new institutions set out in the code of governance.
One point to note is that the document defines a dispute as anything that has not been agreed with HMRC so I would suggest that any company that has open enquiries from HMRC should at least read through the commentary.
Pages 17 - 22 of the commentary that provide detailed guidance for the conduct of a dispute are particularly interesting. The guidance here is practical and makes some (not very) veiled criticisms of how HMRC has sometimes conducted disputes in the past. If companies feel HMRC are dragging their heels in a dispute referring to this guidance might help to speed things along.
There is also a revised Litigation Settlement Strategy set out in the appendix to the document.
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