Tag Archives: VAT-non-statutory-clearance

VAT: How to use HMRC advice and information

By   8 August 2023
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HMRC have updated information (on 30 June 2023) on how to use its guidance. This includes when a taxpayer can rely on information and/or advice provided by HMRC. This is the first update since the original publication in March 2009.

The document covers; how to check the advice and information given give applies to a business, what a taxpayer can expect from HMRC, and what to do if you think you have incorrect information.

This covers enquiries made via:

  • letters
  • telephone calls
  • pages on gov.uk
  • webchat
  • posts on social media

HMRC publishes information and guidance that can address common issues, but this does not always provide a definitive answer in every situation. If this is the case, a business can:

Reliance on incorrect information

HMRC says:

“You may be able to rely on incorrect advice and information from HMRC, if it’s both:

  • reasonable for you to expect this
  • very unfair for HMRC to act in a different way from the advice and information given.”

HMRC will take a number of things into account when considering this. In some cases, there may be a strong reason for HMRC to act in a different way from the advice and information given.

Where relevant, HMRC will generally consider whether:

  • you told HMRC about all the relevant facts
  • HMRC’s advice and information was clear and certain
  • you already relied on the advice and information and would be worse off if HMRC did not act in line with it

Once it is clear HMRC’s advice and/or information was incorrect, a taxpayer must make sure to use the correct advice and information going forward.

Right of appeal

There is no general right of appeal against the advice and information HMRC provides, except where rights of appeal are set out in statute.

NB: It is always worth considering the HMRC Charter which sets out what a taxpayer can expect from HMRC and what HMRC expects from a taxpayer.

That is all well and good, but I have written about this: VAT – Do as HMRC say…. and if you do… they may still penalise you!

 

VAT: Updated guidance – Non-Statutory Clearances Service

By   21 July 2022
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HMRC has published new guidance on the non-statutory clearance service available for all businesses and their advisers.

Non-Statutory clearances

A Non-Statutory clearance is a mechanism where a person can ask HMRC in writing for guidance or advice in certain circumstances. The guidance sets out how to use this procedure. The service is limited, however, and HMRC will only advise if the applicant:

  • has fully read the relevant guidance or contacted the relevant helpline
  • has not been able to find the information required
  • is uncertain about HMRC’s interpretation of tax legislation

However, HMRC will not respond if

  • it is not given all the necessary information —checklists at Annex D (for VAT) provide details of what is required
  • it does not think that there are genuine points of uncertainty – it will explain why HMRC think this and direct the applicant to the relevant online guidance
  • if  HMRC think the clearance request is to give tax planning advice, or to approve tax planning products or arrangements
  • the application is about treatment of transactions which, in HMRC’s view, are for the purposes of avoiding tax
  • HMRC is checking the applicant’s position for the period in question, in which case queries must be directed to the officer dealing with the inspection
  • it is a clearance on matters of fact, such as if certain activities constitute a business
  • there is a statutory clearance applicable to the relevant transaction

HMRC is currently not dealing with postal applications, so a request must be sent by email to nonstatutoryclearanceteam.hmrc@hmrc.gov.uk

HMRC will usually reply within 28 days, but say where difficult or complicated issues are involved it may take longer. If this is the case, HMRC will acknowledge a request and tell the applicant when they can expect a full reply. VAT non-statutory clearance requests are currently taking around 12 weeks to process.

Appeal

There is no general right of appeal against advice given by HMRC, except where rights to appeal are set out in statute.

Appeal rights are usually against decisions HMRC take, such as issuing an assessment for underpaid tax or a penalty.

However, some VAT related decisions are classed as ‘appealable decisions’ by statute. The letter HMRC sends will explain if the applicant is able to appeal and what to do if the applicant disagrees with a VAT decision.

Relying on HMRC advice

There has been changes to such reliance, set out here. HMRC explain when its advice is not binding here.