LSS40300 - Resolving a dispute: How dispute resolution is put into effect must be in accordance with the Law

The requirement that disputes resolution must be in accordance with the law applies equally to how that resolution is put into effect and to its substance.

So if, for example, HMRC and the customer agree, as part of resolving a dispute, that the amounts due are:

• an additional amount of income tax

• plus an associated penalty, and

• an additional amount of VAT

• plus an associated penalty

HMRC may issue individual assessments for all four elements. We cannot, however, include VAT or VAT penalty elements in a contract settlement. We could include the understated income tax and associated penalty in a contract settlement, but we would have to formally assess the understated VAT and penalty.