Guidance

Tax Disputes Resolution Board remit

Published 14 September 2023

Part 1 - Remit and procedures

Introduction

The Tax Disputes Resolution Board (TDRB) has been authorised by the Commissioners for Revenue and Customs to fulfil the following roles:

• making decisions and recommendations about proposals for resolving significant tax disputes
• serves as the escalation point for cases referred from case Boards within lines of business (see paragraph 7 below)
• provide recommendations to the Commissioners in respect of potential breaches of the Code of Practice on Taxation for Banks

The TDRB also fulfils an important internal advisory function.

The remit of the TDRB extends to significant tax disputes to be resolved by civil procedures, in any business area.

Operational principles of the TDRB

The following principles should underpin the operation of the TDRB:

• HMRC should have strong governance processes, proportionate to risk, which provide assurance to the department’s stakeholders, staff and customers that decision-making in significant tax disputes is robust and even‑handed, in accordance with the Litigation and Settlement Strategy

• HMRC’s tax professionals should be able to understand and consistently apply those governance processes

• HMRC’s tax professionals are empowered to play the fullest part possible in the progression and resolution of significant tax disputes and feel their work is supported by the TDRB and other HMRC governance boards

• HMRC’s governance processes should be proportionate, effective and efficient and should not adversely impact compliance delivery and customer experience

The remit of the TDRB

Trigger points for referral to Commissioners via the TDRB

1.‘£100 million cases’: The TDRB shall make recommendations to the Commissioners about the resolution of any dispute in a case where the tax under consideration in the case (considered as a whole) is at least £100 million, unless the matter can be resolved without reference to the TDRB under the terms of paragraphs 11 to 15 below.

2.‘£500 million adjustments’: The TDRB shall make recommendations to the Commissioners about the resolution of any dispute on a risk, where the maximum potential adjustment is at least £500 million, that the risk would not otherwise be within its remit by virtue of paragraphs 1 or 3 or 4 to 6 below.

3.‘Sensitive cases’: The TDRB shall make recommendations to the Commissioners about the resolution of any dispute in a case which is sensitive.

4.‘Sensitive risks’: If a risk in a case is sensitive the TDRB shall make recommendations to the Commissioners for the resolution of any such dispute.

5.Banking Code breaches’: The TDRB shall make referrals to the Commissioners, for the Commissioners to decide on whether a bank is in non-compliance with its obligations under the Code of Practice on Taxation for Banks.

Trigger points for referral to TDRB where automatic onward referral to Commissioners isn’t required

6.‘Cases involving unusual or novel features’: Subject to paragraphs 1 to 5 above, the TDRB may make decisions about the resolution of any dispute in a case which is referred to it on the grounds that the case involves unusual or novel features. The TDRB may choose to make recommendations to the Commissioners for the resolution of any such dispute.

7.‘Referrals from the Customer Compliance Group Disputes Resolution Board (CCG DRB): The TDRB may make decisions about the resolution of any dispute in a case that has been referred to it by the CCG DRB unless it is a sample case referred to TDRB by the Director. The TDRB may choose to make recommendations to the Commissioners for the resolution of any such dispute.

8.‘Director referrals’: Where a dispute does not fall within paras 1 to 7 of the TDRB remit but the Director with operational accountability for a case considers that the nature of the dispute renders it necessary or prudent for referral to be made to the TDRB, the TDRB may make decisions about the resolution of the dispute. The TDRB may choose to make recommendations to the Commissioners for the resolution of any such dispute.

TDRB advisory function

9.The TDRB may provide guidance and advice in relation to any case or risk where it appears necessary or prudent to the TDRB to do so, whether or not the case or risk would otherwise fall within the remit of the TDRB.

Decisions to resolve disputes or risks to be unanimous

10.Any decision of the TDRB in relation to the resolution of a dispute in a case or risk shall be made unanimously by all present at the relevant meeting of the TDRB. Where the TDRB cannot reach a unanimous decision the TDRB shall refer the case or risk to the Commissioners or, where appropriate, request that further work is undertaken by the case team.

Circumstances where referrals do not need to be made to TDRB

11.For binary issues, or issues where there are a number of discrete options, if a customer proposes to agree the largest amount of adjustment on a risk and pay the largest amount of the tax together with any associated interest and/or penalty as determined by HMRC, the decision to accept the customer’s proposal does not need to be referred to TDRB, unless that proposal also forms part of a wider proposal to resolve other risks.

12.A decision about how to resolve a risk in a case under 1 and 2 within the remit of the TDRB does not need to be referred to the TDRB if all of the following apply:

• the decision relates to a risk where the tax under consideration is less than £15 million and the amount of the maximum potential adjustment is less than £100 million
• the proposal for the risk is not related to discussions concerning the resolution of other risks in the case
• there is full agreement between all the relevant HMRC partners; and where appropriate, the Transfer Pricing Panel or Board or Diverted Profits Tax Board has been consulted, and has agreed the basis of resolution
• the resolution of the particular risk is in line with any strategy agreed by the Contentious Issues Panel or Anti-Avoidance Board as the case may be
• there are no unusual or novel features
• neither the case nor risk are sensitive
• it is not a risk in a sample case
• the risk is not in litigation and does not impact on litigation in other cases

13.Where the Commissioners have been sighted on an existing handling strategy set by the Contentious Issues Panel, the Anti Avoidance Board, or otherwise approved by the Commissioners and the risk is on all fours with that strategy, the risk does not need to be referred to TDRB for approval provided this approach is agreed by the Deputy Director with operational accountability for the risk.

14.Where the risk relates to VAT Supply Chain Fraud, a referral to TDRB is not necessary providing that there are no unusual features and that the VAT Serious Non Compliance and Fraud Team agree that either the ‘Kittel’ or the ‘Mecsek’ test applies.

15.Where the risk is part of a project, and at least one case within the project meets one of the criteria within paragraphs 1 or 2:

• the first case in the project to be settled, regardless of the amount of tax under consideration, will require referral to TDRB (even where the case would otherwise fall within the remit of the CCG DRB), and TDRB will make recommendation to Commissioners about the resolution of the dispute
• all identical cases thereafter will not require referral to TDRB or the CCG DRB providing that the Deputy Director with operational responsibility for the case agrees it is on all fours with the previous case considered by Commissioners

16.Decisions on Judicial Reviews (JR) only need to be referred to TDRB and the Commissioners where HMRC is considering not defending the Judicial Reviews unless there are particular sensitivities about defending the Judicial Review.

17.Exceptionally, the Director with operational accountability for the case may consider that the TDRB’s principles are best delivered without reference to the Commissioners for a decision. In such a case the Director should keep a record (copied to the TDRB secretariat) of the circumstances and, as required, be ready to explain to the Commissioners’ satisfaction why a referral was not necessary.

Referrals

18.Referrals to the TDRB shall be made on behalf of the Director with operational accountability for the case. In particular, a Director is responsible for identifying cases or risks for consideration by the TDRB on the grounds that the case or risk involves unusual or novel features or is sensitive.

19.Referrals by the TDRB to the Commissioners shall generally be made at the point where there are firm proposals for the resolution of a dispute.

20.The TDRB may exceptionally refer a case or risk to the Commissioners for their consideration prior to any firm resolution proposals being made.

Part 2 – Definitions

‘Dispute’ has the same meaning as ascribed to it in the Litigation and Settlement Strategy.

In summary, ‘dispute’ is defined as including all areas of non-agreement between HMRC and a customer or their agent over a substantive tax liability, where that non‑agreement has been raised through:

• an enquiry from either side, including a dispute in relation to pre‑transaction or pre-return clearances work
• a challenge made by HMRC to a customer
• a challenge made to HMRC by a customer where HMRC has decided to take up or respond to the challenge

This means that in relation to disputes subject to civil law procedures, the definition covers compliance activity from start to finish.

A dispute would not normally cover risk assessment work including situations where customers are asked to provide information before an evaluation can be made of the extent of any risk to HMRC (typically, for example, where an analysis of items in the accounts are requested).

‘Risk’ means a particular transaction (or series of transactions) or an item in a return or declaration which causes risk to past, or present or future revenue flows.

A ‘case’ is the sum total of all of the risks that are not finally concluded at any one time in relation to a particular business (which, for the avoidance of doubt, includes all of its group associates) or individual or other entity. It does not matter in which part of HMRC a risk is being dealt with as all risks are aggregated for the purpose of determining the value of a case. Where there is only one risk in relation to a particular customer that single risk will constitute the whole case.

‘Tax under consideration’ is the amount of tax or duty attributable to a dispute on a risk after taking into account the impact of losses or other reliefs. It is calculated without regard to the strength of the arguments or the prospects of success and is the amount that would arise if the risk were conceded in full to HMRC. It should include any penalty which, in HMRC’s view, is potentially payable.

It should also include, where appropriate, the Future Revenue Benefit (FRB) that might arise if the risk were resolved in HMRC’s favour. Again account must be taken of the impact of losses and other reliefs. Any FRB calculations must be sensible and realistic and any assumptions about levels of profitability and behavioural shift must be evidence-based. FRB projections should not extend longer than 5 years. Tax under consideration should be measured at the point of referral. However, where there has been a re‑evaluation or recent closure of a risk, the advice of the TDRB secretariat should be sought if as a consequence of those changes a case falls outside the remit of the TDRB.

Whilst interest is not normally included in the calculation of tax under consideration, it should be taken into account where it is a significant factor in the evaluation of the overall amount at risk to HMRC. Typically this would involve enquiries or claims to repayment extending back over earlier years (for example, Fleming claims). Where interest is itself a significant element within any dispute it may be appropriate to refer to the TDRB. The advice of the TDRB secretariat should be sought in all such cases.

‘Maximum potential adjustment’ is the adjustment to expenditure, receipts, profits, losses, income or gains that would arise if the risk to which it relates were conceded in full to HMRC. It is calculated without reference to the strength of the arguments or the prospects of success and is the gross amount of the potential adjustment taking no account of losses or other reliefs.

‘Resolution’ of any dispute means any decision to resolve that dispute on a particular basis, and includes a decision to take steps that are likely lead to the commencement or cessation of litigation. Resolution proposal should be construed accordingly.

‘Sensitive’ cases or risks are those where a decision to resolve a dispute might have a significant and far-reaching impact on HMRC policy, strategy, operations, tax receipts or HMRC’s reputation.

‘Unusual or novel’ features in a dispute may include the use of complex or innovative legal procedures, utilising a new piece of legislation, or technical arguments not previously used by either party.

Part 3 – Composition of the TDRB

1. Chair

Any permanent member of the TDRB who is a director.

2. Permanent Members of the TDRB

Director Tax Strategy and Professionalism

Director Large Business

Director Business, Assets and International

Director Wealthy & Mid-Sized Business Compliance

Director Customs and Indirect Tax Policy

Director Counter-Avoidance

Deputy Director Fraud Investigation Service

Assistant Director Head of Specialist Policy Business, Assets and International

Assistant Director Financial Products and Services - Business, Assets and International

Director or Deputy Director Solicitor’s Office and Legal Services

Assistant Director Large Business - Dispute Resolution and Governance

Deputy Director Indirect Tax (VAT)

Director Individuals Policy

3. Quorum

The TDRB shall not be authorised to make a decision unless there are a minimum of 5 permanent board members present at a meeting including 3 directors. Further, no decision is to be taken on any case or risk where a permanent member (or their deputy) who is a significant stakeholder in relation to that case or risk is absent.

4. Conflict of interest

Before any case or risk is discussed, any person who is present at a TDRB meeting will declare any conflict of interest. In this context a conflict of interest is deemed to include any prior contribution to resolution discussions with the customer or prior involvement with the HMRC team as to the basis on which a case or risk might be resolved. Conflicts of interest are to be clearly noted.

5. Deputies

Exceptionally, permanent members may be represented at Board meetings by a deputy. That deputy should, where possible, be at Senior Civil Service (SCS) level and will normally be appointed by the director of the relevant business area.

6. Non-permanent members of the TDRB

Directors (or their nominated deputies) who are not permanent members will be co-opted to the TDRB when a case or risk has been referred to the TDRB from their directorate, or where they hold a significant stakeholder interest.

7. Decisions by correspondence

The Chair will decide when a matter might be dealt with by correspondence rather than by discussion at a TDRB. This will be rare and will be reserved for the most straightforward cases where an urgent decision is required. Normally in urgent matters the secretariat will seek to arrange an exceptional meeting of the TDRB or facilitate a discussion by telephone conference.

Where TDRB business is dealt with by correspondence all of the above rules will equally apply.

8. Arrangements for meetings

Meetings of the TDRB will be held monthly or at such times as the chair may decide. They will normally be face-to-face meetings, although exceptionally may be held by telephone conference.

10. Referrals to the Commissioners

Any referrals from the TDRB to the Commissioners shall be made from the Chair.