beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

HMRC’s Litigation and Settlement Strategy


HMRC has a litigation and settlements strategy (LSS). It is relevant to all aspects of how HMRC enters into, handles and settles disputes. It sets out principles for bringing disputes to a conclusion, whether by agreement with the taxpayer, or by litigation, i.e. appeal to tribunals. It also explains which groups of people are responsible for decisions.

The aim of the LSS is to ensure that HMRC conducts disputes in a way that is professional, effective and that supports HMRC’s objectives to close the tax gap and provide customers with a clear understanding of the law.

The central themes of the LSS are

  • to seek non-confrontational solutions where possible,
  • to focus on issues that best serve HMRC’s goal of tax gap reduction,
  • to choose cases for their wider impact, as well as for their own value,
  • where HMRC has a strong case to seek full value from settlement, or take the matter to litigation,
  • to not pursue weak arguments,
  • to team-work cases with colleagues, including those in other parts of HMRC.

Business units undertaking compliance operations must ensure they put the principles of the LSS into practice consistently. Further details are available on their intranet sites.

Statutory payments

When dealing with disputes about statutory payments (SPs) be aware of the following points

  • people who satisfy the qualifying criteria for SPs are entitled to a specific amount, they do not have to claim it. The amount they are entitled to receive is not negotiable.
  • employees entitled to statutory sick pay (SSP) or statutory maternity pay (SMP) cannot receive the state benefit equivalent for the same days SSP is due or the same week SMP is due.

So you must not enter into any agreement which seeks to amend or remove an employee’s entitlement to a SP. The Social Security Contributions and Benefits Act 1992 renders void any agreement which amends or excludes any entitlement to a SP.