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HMRC internal manual

Compliance Handbook

Litigation and settlement strategy: resolving a dispute: dispute where there may be a range of possible figures

Some disputes are ‘all or nothing‘ in nature, see CH40850. However, other disputes will have a range of possible figures for the liability.

For example, officers working in either direct or indirect tax may encounter disputes involving

  • compliance check cases where the true figure of turnover, recoverable inputs or taxable profit is genuinely uncertain (due to incomplete or missing records, for example)
  • issues that turn on a legal interpretation where there is a range of possible interpretations that a court or tribunal might take
  • cases involving legislative provisions that specifically require or permit a just and reasonable apportionment to be made
  • cases involving avoidance where a realistic view has to be taken of what would have happened without avoidance being present.

Officers working in direct tax may also encounter valuation or transfer pricing cases where there is a range of comparables or possible valuation or pricing methods that might be endorsed by a court or tribunal.

Officers working in indirect tax may also encounter partial exemption methodology cases where there are several acceptable possible methodologies that could be used for determining a person’s VAT recovery position.

In all such cases, we want to resolve the dispute, whether by settlement or litigation, in the way that is likely to secure the right tax most efficiently. Alternative Dispute Resolution (ADR) may help in some cases, see CH280400.