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HMRC internal manual

Appeals reviews and tribunals guidance

Reviews and appeals for indirect taxes: Settlement of appeals: Settlement by agreement

Appeals may be settled by agreement with the customer at any time before the tribunal has completed its hearing of the appeal, whether or not there has been a review.

Settlement of appeals by agreement under section 85 of the VAT Act 1994 is a legal process and the same consequences follow as would have followed had the matter been decided by the tribunal.

It is therefore very important that the agreement is carefully worded, in particular that any limitations to the agreement are clear. The decision maker should always consider taking legal and/or specialist advice to make sure that the agreement does not affect tax treatment in later years. This is particularly true in VAT partial exemption cases.

The appeal may be settled if the customer agrees with HMRC that the decision should be

  • upheld
  • varied in a particular manner, or
  • cancelled.

Where the customer and HMRC agree that the decision should either be cancelled or varied so that the tax charged is lower, authority for the agreement is required.

Agreements may be reached orally or in writing. Where an agreement is reached orally the decision maker (or case owner in certain business areas, for example Specialist Investigations) should confirm the agreement by writing to the customer (or the customer may write to us to confirm).

If an agreement is made under s 85 the tribunals caseworker / review officer / decision maker as appropriate should tell the tribunal about the agreement: this finalises the appeal and the tribunal needs to know that such an agreement has been made so they can update their records, see ARTG8460.

The customer has 30 days from the date of the agreement within which to notify HMRC that they have changed their mind.