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HMRC internal manual

Inheritance Tax Manual

Interim reports: negotiation impasse and appeal reports

If the VOA (IHTM23002) informs you that negotiations have reached an impasse you should be aiming to respond within 15 working days. Therefore, as soon as you receive form VO 1103 you should consult your Team Leader about it (if you are in Compliance Group) or refer it to TSS for consideration (if you are in PC&S).

If the impasse relates to a point of principle, the matter should be referred to Litigation for consideration before a response is sent to the VOA. In other cases Litigation should also be consulted, at least informally, before any action is taken.

Options for possible action will include asking for an ‘Appeal Report’, concluding matters there and then and contacting the taxpayer, either to explore the possibility of authorising further negotiations with the VOA or to negotiate some form of compromise settlement direct. Depending on the decision reached, you must keep both the VOA and the taxpayer informed of the position and of the action to be taken.

On receipt of the Appeal report you should check that it has been endorsed by someone within the VOA’s Chief Executive Office. Subject to this, you should refer the case to Litigation Section for immediate consideration, via your Team Leader (Compliance Group) or TSS (PC&S). But before doing so, you should contact the taxpayer to confirm that the report has been received and to explain that we shall be in touch once the matter has been considered by our specialist Litigation Section.

Once Litigation Section has considered the matter, you will receive guidance on how to proceed. Alternatives include immediate issue of a NOD (IHTM37001), asking the VOA to re-open negotiations, negotiating directly with the taxpayer, or instructing the VOA to close the case.

In the latter situation, the taxpayer should be informed that it is not proposed to pursue the matter further but that this does not imply agreement of the value offered by them. Where appropriate, send a calculation of tax based on the taxpayer’s latest figure. This failure to reach agreement does not prevent you issuing a clearance certificate (IHTM40001) in due course.

In cases where a determination is not considered appropriate because further action is deemed not to be cost effective or where a compromise or ‘tax’ settlement represents the best way of concluding the valuation aspect you should provide the VOA with a full explanation as to why the matter is not to be pursued. You should give the VOA full details of the settlement figures and of the reason why further action is not felt appropriate. The VOA should at this time be asked to provide a report in accordance with Paragraph 27.60 of the VOA Branch Instructions.

The VOA will then send a final report annotated ‘because we have been asked for the case to be closed’ together with, where practical, the latest unagreed VOA valuation. In this way, the amount of the tax effectively conceded as a result of the ‘settlement’ can be quantified.