HMRC litigation and settlement strategy

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • HMRC litigation and settlement strategy
  • Introduction
  • Key points for advising clients in dispute with HMRC
  • Encouraging collaborative working
  • Conclusion


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 set out a series of generic principles that govern how HMRC intends to conduct civil disputes to ensure this is done proportionately, in a way that minimises the number of ongoing disputes and within the law. The LSS, and its attendant commentary, 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 NICs, PAYE or VAT. This is due to the possible implications for an individual’s contribution record in the case of NICs, and the tax treatment of other taxpayers in the case of PAYE and VAT disputes. Therefore, the LSS should always be read in conjunction with the HMRC published operational and policy guidance that applies to the particular dispute in question.

This guidance note:

  • highlights the main points to consider when deciding whether HMRC is following the LSS in a particular case
  • explains what action can be taken if HMRC fails in any dispute to follow the LSS

The current wording of the LSS can be found on the GOV.UK website .

Key points for advising clients in dispute with HMRC

A comprehensive commentary / guidance for HMRC staff on the current LSS can be found on the GOV.UK website .

The main points for advisers to take away from