The basic principles of agreeing a settlement of tax enquiries


1095p Leanne Hathaway – Head of Tax and Trusts at Edward Hands and Lewis

In 2007, HMRC published the litigation and settlement strategy (LSS), which was revised in July 2011 following some key cases.


The LSS sets out the principles and standards which HMRC should apply when settling disputes with taxpayers. The general principles include:


  1. Each dispute should be settled on its own merit. There should be no trade-off between unrelated points and no package deals should be offered.
  2. If a dispute arises from an all-or-nothing point, the settlement terms should be on all-or-nothing terms.
  3. Tax, interest and penalties should be not be undercharged in order to reach a quick settlement.


In tax avoidance cases, if HMRC’s position is strong, HMRC should not settle for less than 100% of the tax and interest due.


HMRC is responsible for collecting and managing the public revenue and by adhering to this approach the aim is to act consistently.


If it is possible to reach a settlement then HMRC are open to resolving matters without resorting to litigation.  In many cases this is the best possible outcome, particularly if all relevant factors (such as interest, penalties and consequential tax charges) are taken into consideration at the time.


For assistance with HMRC enquiries, please contact Leanne Hathaway, our in house Chartered Tax Adviser.


Edward Hands & Lewis have offices at Leicester, Loughborough and Market Harborough.


EdwardHandsandLewis Edward Hands & Lewis is a firm that has evolved over time with a commitment to its core values. We have never forgotten that we are here because of our clients who have supported us over many years. We are proud to be at the heart of the communities in which we serve and we are equally proud of the team that we have to provide such service. We aim to provide value for money with a commitment to good, clear and concise advice. We take the time to ensure that our advice and assistance matches your goals. Unlike many professional services organisations, brevity and helpfulness are our watchwords. The agile and creative minds of the people we employ equip them to advise the same client on a diverse range of matters. This multi-specialism makes our lawyers and advisors expert on a range of the legal and other issues affecting their clients’ business. The strength and depth of our client relationships avoids wasted time and cost: it enables us to keep up to speed on business and sectoral developments and there is no need to field large teams of experts as a matter of course. While we have been established for many years, we pride ourselves on forward-thinking and believe we have achieved the right blend between traditional and modern. Whether you are an existing client of ours, are about to become a client or are looking to join us, we sincerely hope that your experience is a positive one.

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