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HMRC internal manual

Technical Teams Operational Guidance

Settling the enquiry: agreeing income profit additions: concessions in negotiating income/profits/gains

SI has a good record in bringing cases of difficulty to an agreed and fair conclusion. We have to do all we can to preserve and enhance this reputation.

Inexperienced Investigators may find it initially very difficult to judge what may be conceded in negotiation and what may not. However the Team Leader will often be present at the most difficult meetings to provide support and guidance.

Every case will be unique and general advice is consequently limited.

Some points are:

  • No HMRC officer, within or outside SI, can set aside the statute or published treatments and time limits, unless we are negotiating a means restricted overall settlement. These require Assistant Director approval .
  • Great care should be taken not to set adverse precedents or compromise policy on technical matters. Try to recognise areas of sensitivity and get prior advice from your Team Leader or specialists.
  • Try to keep to the sequence of events set out at TTOG5115.
  • Establish so far as possible the facts, then try to agree the income or profit additions before going on to negotiate tax treatment and overall settlement.
  • In those cases where there has to be recourse to a ‘global’ settlement, take care to avoid making poorly judged concessions that cannot be recovered. See SIOG9500.
  • Make clear that negotiation and concession are without prejudice (to both sides). Have particular regard to this when negotiating in the problem areas mentioned at TTOG5325.

Investigators must remember that if there are areas of essential dispute (for instance on the correct interpretation of legislation) the case will fall within the remit of the Litigation and Settlement Strategy. Under such circumstances negotiation is unlikely to be possible. Investigators should not be offering to collect less than the amount HMRC believes to be the full amount of tax, interest and (where appropriate) penalties. Concessions should relate only to genuinely grey areas where neither party can be sure what the true facts are. Negotiation and concession is justifiable in the face of that uncertainty, but not merely in order to get a quick settlement. The same applies to the negotiations concerning penalty mitigation (see SIOG9200).