PE51500 - Partial Exemption powers: special method override notice: handling issues for HMRC notices

Who wields this power?

A Notice can only be served with the express permission of Partial Exemption policy team, in the same way as for directions of new special methods or to terminate existing methods. The regional PESO and/or the Partial Exemption policy team will work with local operational staff to evaluate a case, the RPESO in conjunction with the Partial Exemption policy team will decide whether this power, or one of HMRC’s other powers, will be used.

When will the power be used?

This power will only normally be used where:

  • HMRC have clear evidence that the current special method does not fairly and reasonable reflect the principal of use.
  • We are satisfied that preparing a replacement method will not conclude quickly and that HMRC or the business would otherwise lose out.
  • HMRC will have decided that it is not practicable to direct a new, fair and reasonable, special method.

In practice this means either:

  • HMRC have gone through the usual procedure of examining the method, raising and discussing concerns, etc. but negotiations have not led to proposals capable of approval (most cases);
  • HMRC have tried to go through the usual procedure, but the business has (effectively) refused to engage in constructive discussions (some cases); or
  • HMRC are attempting to prevent a large loss of revenue, an avoidance scheme or one-off manipulation of the method before it happens (a few rare cases).

The power will also be used in cases of an incorrect declaration, PE43300 gives further information.

The Partial Exemption policy team/PESO will not allow the service of a Notice unless they find the evidence provided of the need to do so is conclusive.