Guidance

Customer Compliance Group Disputes Resolution Board remit

Published 14 September 2023

Part 1: Remit and procedures

Introduction

The Customer Compliance Group Disputes Resolution Board (CCG DRB) has been authorised by the Customer Compliance Group Senior Leadership Team (CCG SLT) to: make decisions and recommendations, or provide advice, about proposals for resolving significant tax disputes in any business area within CCG, other than those within the remit of the Tax Disputes Resolution Board (TDRB).

Risks need to be referred to the CCG DRB for a decision at the point when HMRC has all the facts and information necessary to make a decision on how we should resolve the dispute. This includes decisions to take steps that are likely to lead to the commencement or cessation of litigation, and decisions to accept a customer’s proposal or position. It includes decisions that HMRC will concede a dispute, either in full or in relation to a particular period or return.

Governance principles

These principles should also underpin the operation of the CCG DRB:

• HMRC should have strong processes, proportionate to risk, which provide assurance that decision-making 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 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 CCG DRB and other HMRC boards
• the CCG DRB should be proportionate, effective and efficient in its operations and not adversely impact compliance delivery and customer experience

Risks within the remit of the CCG DRB

For customers owned by the Large Business directorate

1.‘£15 million risks’: The CCG DRB is responsible for making decisions about the resolution of any dispute on a risk where the tax under consideration is at least £15 million, and the dispute is not already within the remit of the TDRB.

2.‘£100 million adjustments’: Unless already covered by paragraph 1 above, the CCG DRB is responsible for making decisions about the resolution of any dispute on a risk where the maximum potential adjustment is at least £100 million, and the dispute is not already within the remit of the TDRB.

For all other CCG customers

3.‘£5 million risks’: The CCG DRB is responsible for making decisions about the resolution of any dispute on a risk where the tax under consideration is at least £5 million and the dispute is not already within the remit of the TDRB.

4.‘£50 million adjustments’: Unless already covered by paragraph 3 above, the CCG DRB is responsible for making decisions about the resolution of any dispute on a risk where the maximum potential adjustment is at least £50 million and the dispute is not already within the remit of the TDRB.

5.Where there is a £5 million risk or a £50 million adjustment, any other risks that are known to exist on the same customer should also be notified to the CCG DRB as part of the submission. If other risks are being resolved at the same time, they may need to be included in the submission for a board decision. This should be discussed with the secretariat.

For all customers

6.‘Other significant decisions’: The CCG DRB may also consider referrals for decision or advice about other significant risks not already within the remit of the TDRB, where the Deputy Director, on behalf of the case team, believes that CCG DRB consideration would add value. The referral might apply, for example, to a decision that is likely to lead to the commencement, continuation or cessation of litigation.

Exceptions to paragraphs 1 to 6

7.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 the CCG DRB, unless that proposal also forms part of a wider proposal to resolve other risks.

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

9.Where the Commissioners have been sighted on an existing settlement 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 the CCG DRB for approval provided this approach is agreed by the Deputy Director with operational accountability for the risk.

10.Where the risk relates to VAT Supply Chain Fraud, a referral to CCG DRB 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.

11.Where the risk is part of a project, and at least one case within the project meets one of the criteria within paragraphs 1 to 4:

• the first case in the project to be settled, regardless of the amount of tax under consideration, will require referral to CCG DRB
• all identical cases thereafter will not require referral to 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

12.Where HMRC is proposing to defend a judicial review, and there are no sensitive (or potentially sensitive) issues.

Submissions

13.Referrals to the CCG DRB shall be made on behalf of the Deputy Director with operational accountability for the risk/risks. Deputy Directors are responsible for identifying risks meeting the criteria for referral and ensuring that referrals are made at the appropriate point.

14.The CCG DRB secretariat should be consulted in all instances of doubt or difficulty as to whether and/ or when a referral to the CCG DRB should be made. This would include large cases on the borderline of the monetary thresholds referred to in paragraphs 1 to 5 above.

15.For sample cases, the Commissioners will be advised of the recommendation by the CCG DRB.

Part 2: Definitions

1.’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

2.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). Equally a dispute would not include clearance applications in circumstances where further explanation or clarification is required before a decision can be made.

3.’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.

4.’Risk Owner’ is the person or team within CCG that is working the risk.

5.For governance purposes a ‘customer owned by CCG’ means a customer dealt with Wealthy and Mid-Sized Business Customers, Individuals and Small Business Customers or Large Business and this determines the limits of the remit that apply.

6.’Tax under consideration’ is the amount of tax or duty attributable to a risk after taking into account the impact of losses or other reliefs. It is calculated once HMRC has a reasonable understanding of the facts 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 and should not be revised to reflect changes in HMRC’s view of its likelihood of success.

7.It should also include, where appropriate, the consequential yield, Future Revenue Benefit (FRB), and Revenue Loss Prevented (RLP) 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 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. The secretariat should be notified of a potential new case as soon as it is possible to calculate the tax under consideration with a reasonable degree of accuracy and it is likely the tax under consideration exceeds the limit for a referral to the board. The secretariat should be consulted in any case of doubt or difficulty and in particular where a re-evaluation or closure of a risk suggests the case may fall outside the remit of the board.

8.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. Where interest is itself a significant element within any dispute it may be appropriate to refer to the CCG DRB. The advice of the secretariat should be sought in all such cases.

9.’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.

10.’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.

Part 3: Composition and administration of the CCG DRB

1. Chair

The chair of the CCG DRB will be the Director Large Business or where necessary their deputy. Exceptionally any Deputy Director who is a permanent member of the CCG DRB may step in to chair.

2. Permanent Members of the CCG DRB

Director Large Business (Chair)

Deputy Director Wealthy and Mid-Sized Business Customers

Deputy Director, Individuals and Small Business Customers

Deputy Director Business, Assets and International

Deputy Director, Counter-Avoidance Directorate

Deputy Director, Solicitor’s Office and Legal Services

Deputy Director Indirect Tax

Deputy Director Individuals Policy

Deputy Director, Tax Strategy and Professionalism

Deputy Director, Fraud Investigation Service

Deputy Director, Large Business

Assistant Director, Large Business, Head of Dispute Resolution and Governance Team

3. Non-Permanent Members of CCG DRB

Customs Directorate

Excise Directorate

Accountants

Specialist Personal Tax

International Tax

4. Quorum

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

5. Deputies

Exceptionally, permanent members may be represented at board meetings by a deputy. That deputy must be approved by the CCG DRB secretariat.

6. Non-permanent members of the CCG DRB

Non-permanent members with other roles (for example Compliance Accountants) can be co-opted to the CCG DRB when the chair considers that the risk would benefit from their input. The chair may co-opt other appropriate persons to act as non-permanent members when the chair considers that the risk would benefit from their input. In these circumstances the non-permanent member will only attend the discussion and be party to the decision on the case or risk in question unless the chair agrees that the non-permanent member can play a wider role.

7. Conflict of interest

Before any risk is discussed, any person who is present at a CCG DRB 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 as to the basis on which the risk might be resolved. Conflicts of interest are to be clearly noted in the minutes.

8. Decisions

Any decision of the CCG DRB to accept a customer’s position or proposal to resolve a dispute in a risk shall be made unanimously by all present at the relevant meeting of the CCG DRB. If CCG DRB cannot make a unanimous decision then the proposal will be rejected or, where appropriate, the risk owner or relevant stakeholders will be asked to undertake further work. Exceptionally the CCG DRB chair may refer cases to the TDRB for advice or to make a decision on the resolution of the dispute.

9. Decisions by correspondence

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

10. Arrangements for meetings

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

11. Form of referrals

Board papers will be completed on a template provided by the Secretariat and will set out the issue and decision required by the board, provide background information and articulate the arguments for any options that are being presented. The secretariat will arrange the submission to the CCG DRB. The reports should be with the CCG DRB secretariat at least 15 working days before the board date. All referrals to the CCG DRB including requests for advice must be made via the CCG DRB secretariat. In addition to reviewing the papers, the CCG DRB will normally expect the person with operational accountability for the case to attend the meeting to answer questions.

12. Sample cases

The CCG DRB will refer to the Commissioners an appropriate number of the risks considered by the board as sample cases in order that the Commissioners can fulfil their remit to consider a sample of cases from the CCG DRB.

13. Periodic review of remit and procedures

The CCG DRB is authorised to make changes to its remit. The CCG DRB will review its remit as necessary, but will do so at least annually. Significant changes will be subject to authorisation by CCG SLT and overseen by the Tax Assurance Stakeholder Group.

When necessary the board may depart from the remit in order to meet the underlying governance principles outlined in the Code of Governance. Any such departure will be recorded in the minutes of the relevant board meeting.