Avery West Services

We have extensive experience in acting for taxpayers who have been or are to be given "Hansard" with a view to reaching a financial settlement with the HMRC.

Our work will include:

• Researching background personal information
• Undertaking in-depth reviews of accounting records
• Recalculation of income tax or corporation tax liabilities

which will all be included within a detailed report on the areas of concern.

Once the report has been submitted we will:

• Negotiate with the SCO any further matters that may arise.
• Seek to minimise penalties on additional tax payable.
• Agree deferred settlement terms.
• Represent taxpayers in front of the General Commissioners.

Litigation and settlement strategy

HMRC has recently published new guidance setting out the principals for resolving tax disputes. Tax disputes can be brought to a conclusion by agreement or litigation (which HMRC defines as an appeal to the Commissioners, VAT tribunal or the Courts).

The "Litigation and Settlement Strategy" (LSS) sets out emerging HMRC practice in this area. The main points are:

• Negotiated (agreed) settlements remain the norm
• Litigation will be considered for strong and strategically important cases
• The correct implementation of tax planning is a major focus for HMRC

Negotiated settlements

The LSS document makes it clear that negotiated settlements should "always be sought" before litigation. HMRC will continue to agree tight timetables for progressing cases and will focus on obtaining all the facts as early as possible. One of the purposes of obtaining all the facts is to enable HMRC to obtain early specialist advice to either withdraw or select the best litigation cases.

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Key points covered in the document regarding negotiating settlements are as follows:

• There should be no package deals where a range of issues that is settled for a single sum. Similarly where a dispute covers an "all or nothing" technical point there should be no "split the difference" settlement.
• Where HMRC's legal advice is strong HMRC must not accept less than 100% of the tax due
  (although there is no definition of "strong" or "weak" in the document). A negotiated settlement should not be materially less than a reasonable expectation of the litigation outcome.
• If HMRC's arguments are poor "it will often be best to drop the case" although it has acknowledged that this may not always happen due to the need to preserve the integrity of the tax system.