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HMRC internal manual

Compliance Handbook

How to do a compliance check: resolving issues and disputes: handling a dispute: clarify what the dispute is about

Whenever a dispute arises, it is important that the person recognises that you are in dispute. Try to do this in a non-confrontational way, perhaps by simply saying `We don’t agree on that issue then’ or `That means we have a disagreement which we need to resolve’ or something similar.

Record any response from the person, as recognising that a dispute exists is an important step towards resolving it. At this point you should also agree and record the steps needed to settle the dispute.

A dispute can range from a disagreement with a sole trader about whether a sale is correctly zero rated for VAT, to a technical or legal argument with a large company with millions of pounds of tax at stake.

In order to focus future discussions with the person, or their agent, you need to clearly set out the point or points in dispute.

  • Explain the relevant facts that have been established and how they led to your findings.
  • Try to find out exactly what the person disagrees with and why.
  • Identify any relevant facts that the person disputes and discuss what evidence is needed to support the facts.
  • Identify any assertions or contentions that the person is relying on for their argument and decide what further information is needed to support that assertion.

Where there are several issues in dispute you need to consider each on its own merits and not group them together or trade them off against each other.

You must tell the person, or their agent, about

  • the tax risk or risks that you think exist and
  • the nature of any identified issues.

Working collaboratively will help both sides to see what facts are likely to be relevant in resolving the dispute.