Introduction

HMRC’s litigation and settlement strategy (LSS) governs how HMRC conducts civil law disputes in relation to all taxes. ‘Disputes’ in this context is given a wide meaning as explained below. The LSS covers most of HMRC’s compliance activity but does not apply to criminal investigations.

Advisers need to be aware of the LSS because it sets out a series of generic principles that govern how HMRC intends to conduct civil disputes to ensure this is done proportionately and within the law, in a way that minimises the number of ongoing disputes.

The LSS, and the attendant guidance, is drafted in sufficient detail to provide a ready means of holding HMRC to account (eg through its complaints process) if during any dispute HMRC fails to follow these principles.

Special considerations might apply for disputes involving NIC, PAYE or VAT. This is due to the possible implications for an individual’s contribution record in the case of NIC, and the tax treatment of other taxpayers in the case of PAYE and VAT disputes. Therefore, the