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HMRC internal manual

Admin Law Manual

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HM Revenue & Customs
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Incorrect Advice to Customers: Correcting the tax position

When HMRC is bound by incorrect advice

Any ‘legitimate expectation’ can only apply for the past and we must correct the tax position as soon as possible.

If on full consideration of all facts HMRC is bound by the incorrect advice, the customer should be informed in writing of the correct application of the tax law in his or her circumstances, and when the customer should begin to apply this corrected treatment. This will normally be the date on which the error was drawn to the taxpayer’s attention. You should not use the term “remission” and the customer should not be told that any assessment or amendment is withdrawn. Instead, you should simply say that HMRC has decided to take no further action in respect of the error.

You must report all such losses to the Revenue Losses Team in DMB. Please see DMB Guidance 

When HMRC is not bound by incorrect advice

If on full consideration of all facts HMRC is not bound by the incorrect advice, the customer should be informed in writing of the correct application of the tax in his or her circumstances. If the customer has already made underdeclarations or overclaims, the tax should be recovered via the normal methods. Any question of penalties or interest should be considered in line with the appropriate guidance