Code of Governance for Resolving Tax Disputes updated by HMRC

HMRC has updates its guidance on the internal governance that applies to the way it resolves UK tax disputes.

The first is the introduction of four key principles for dispute resolution:

· Separation – introducing a clear dividing line between the case officers involved in discussing settlement options with taxpayers and those who approve or sign off those settlements.

· Even-handedness – “establishing the right tax liability fairly and consistently”.

· Clarity and transparency – which is achieved through publishing information about internal HMRC governance processes and statistics and information on actual taxpayer disputes (in aggregated form).

· Appropriate levels of tax expertise and scrutiny in tax disputes.

Abigail McGregor, Legal Director at law firm Pinsent Masons, said: “The recent updates to the guidance represent a fairly substantial reorganisation of the locations of the parts of the guidance, with substantive changes being fairly subtle, albeit with some interesting points to note.”

“While it might be expected that HMRC was conducting itself in this manner in any event, a clear elaboration of these safeguards for taxpayers is helpful – in particular the stated need for sign off to be separated from case officers.

“However, this protection is reserved for those disputes with large amounts of tax at risk. While what constitutes ‘large’ is not specifically identified, we would assume that it relates to the levels at which disputes need to be referred to one of the dispute resolution boards.”

McGregor said there are new sections in the code dealing with the GAAR advisory panel; HMRC’s option to issue a published settlement opportunity for groups of taxpayers in similar circumstances; HMRC’s governance of issuing of inaccuracy and failure to notify penalties; and statutory reviews and appeals.

She added that two substantive sections have been removed from the code: the section dealing with specific arrangements for transfer pricing and diverted profits; and the section explaining the high-risk corporates programme (HRCP).