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Part 1: Remit and procedures

Introduction

1.The Customer Compliance Group Disputes Resolution Board (CCG DRB) has been authorised by the Customer Compliance Group Senior Leadership Team (CCG SLT) to make decisions and recommendations, or provide advice, about proposals for resolving significant tax disputes in any business area within CCG, other than those within the remit of the Tax Disputes Resolution Board (TDRB).

Operational principles of the CCG DRB

2.The following principles should underpin the operation of the CCG DRB:

• HMRC should have strong processes, proportionate to risk, which provide assurance to the department’s stakeholders, staff and customers that decision-making in significant tax disputes is robust and even-handed, in accordance with the Litigation and Settlement Strategy (LSS)
• HMRC’s tax professionals should be able to understand and consistently apply those processes
• HMRC’s tax professionals are empowered to play the fullest part possible in the progression and resolution of significant tax disputes and feel their work is supported by the CCG DRB and other HMRC governance boards
• HMRC’s governance processes should be proportionate, effective and efficient and should not adversely impact compliance delivery and customer experience

The remit of the CCG DRB

Trigger points for referral to the CCG DRB

For Large Business directorate customers

3.‘£15 million risks’: The CCG DRB may make decisions about the resolution of any dispute on a risk where the tax under consideration in the risk is at least £15 million, and the dispute is not already within the remit of the TDRB.

4.‘£100 million adjustments’: The CCG DRB may make decisions about the resolution of any dispute on a risk where the maximum potential adjustment is at least £100 million, and the dispute is not already within the remit of the TDRB.

For all other CCG customers

5.‘£5 million risks’: The CCG DRB may make decisions about the resolution of any dispute on a risk where the tax under consideration in the risk is at least £5 million, and the dispute is not already within the remit of the TDRB.

6.‘£50 million adjustments’: The CCG DRB may make decisions about the resolution of any dispute on a risk where the maximum potential adjustment is at least £50 million, and the dispute is not already within the remit of the TDRB.

For all customers

7.‘Deputy Director referrals’: Where a dispute does not fall within paragraphs 3 to 6 of the CCG DRB remit, or within the remit of the TDRB, but the Deputy Director with operational accountability for a risk considers the nature of the dispute renders it necessary or prudent for a referral to be made to the CCG DRB, the CCG DRB may make decisions about the resolution of the dispute.

Decisions to resolve disputes or risks to be unanimous

8.Any decision of the CCG DRB in relation to the resolution of a dispute shall be made unanimously by all present at the relevant meeting of the CCG DRB. Where the CCG DRB cannot reach a unanimous decision then the proposal will be rejected or, where appropriate, the Board will request further work is undertaken by the case team. Exceptionally the CCG DRB chair may refer cases to the TDRB for advice or to make a decision on the resolution of the dispute.

Risks selected as a sample for Commissioners

9.For risks selected as a sample to be referred to the Commissioners for a final decision, the CCG DRB will make a recommendation on the proposal.

Circumstances where referrals do not need to be made to the CCG DRB

10.For binary issues, or issues where there are a number of discrete options, if a customer proposes to agree the largest amount of adjustment on a risk and pay the largest amount of the tax together with any associated interest and/or penalty as determined by HMRC, the decision to accept the customer’s proposal does not need to be referred to the CCG DRB, unless that proposal also forms part of a wider proposal to resolve other risks.

11.Where the Commissioners have been sighted on an existing handling strategy set by the Contentious Issues Panel, the Anti Avoidance Board, or otherwise approved by the Commissioners and the risk is on all fours with that strategy, the risk does not need to be referred to the CCG DRB for approval provided this approach is agreed by the Deputy Director with operational accountability for the risk.

12.Where the risk relates to VAT Supply Chain Fraud, a referral to the CCG DRB is not necessary providing that there are no unusual features and that the VAT Serious Non Compliance and Fraud Team agree that the ‘Kittel’, ‘Mecsek’, or ‘Ablessio’ cases apply.

13.Where the risk is part of a project, and at least one case within the project meets one of the criteria within paragraphs 3 to 6:

• the first case in the project to be settled after it is identified the conditions of this paragraph apply, regardless of the amount of tax under consideration in that individual risk, will require referral to the CCG DRB

• identical risks thereafter will not require referral to the CCG DRB providing that the Deputy Director with operational responsibility for the risk agrees it is on all fours with the previous risk considered by CCG DRB or TDRB

14.Decisions on Judicial Reviews (JR) for risks which are within the governance remit only need to be referred to CCG DRB where they are tax related claims for JR brought by a customer to resolve a specific tax dispute and HMRC is considering not defending the JR.

15.Exceptionally, the Deputy Director with operational accountability for the risk may consider that the CCG DRB’s principles are best delivered without reference to the board for a decision. In such a case the Deputy Director should keep a record (copied to the CCG DRB secretariat) of the circumstances and, as required, be ready to explain to the board’s satisfaction why a referral was not necessary.

Part 2: Definitions

16.’Dispute’ is defined as including all areas of non-agreement between HMRC and a customer or their agent over a substantive tax liability, where that non-agreement has been raised through:

• an enquiry from either side, including a dispute in relation to pre-transaction or pre-return clearances work
• a challenge made by HMRC to a customer
• a challenge made to HMRC by a customer where HMRC has decided to take up or respond to the challenge

17.This means that in relation to disputes subject to civil law procedures, the definition covers compliance activity from start to finish.

18.A dispute would not normally cover risk assessment work including situations where customers are asked to provide information before an evaluation can be made of the extent of any risk to HMRC (typically, for example, where an analysis of items in the accounts are requested).

19.’Risk’ means a particular transaction (or series of transactions) or an item in a return or declaration which causes risk to past, or present or future revenue flows.

20.’Tax under consideration’ is the amount of tax or duty attributable to a dispute on a risk after taking into account the impact of losses or other reliefs. It is calculated without regard to the strength of the arguments or the prospects of success and is the amount that would arise if the risk were conceded in full to HMRC. It should include any penalty which, in HMRC’s view, is potentially payable.

21.It should also include, where appropriate, the Future Revenue Benefit (FRB) that might arise if the risk were resolved in HMRC’s favour. Again, account must be taken of the impact of losses and other reliefs. Any calculations must be sensible and realistic and any assumptions about levels of profitability and behavioural shift must be evidence-based. FRB projections should not extend longer than five years. Tax under consideration should be measured at the point of referral. However, where there has been a re-evaluation or recent closure of a risk, the advice of CCG DRB secretariat should be sought if as a consequence of those changes a case may fall outside the remit of the CCG DRB.

22.Whilst interest is not normally included in the calculation of tax under consideration, it should be taken into account where it is a significant factor in the evaluation of the overall amount at risk to HMRC. Typically this would involve enquiries or claims to repayment extending back over earlier years. Where interest is itself a significant element within any dispute it may be appropriate to refer to the CCG DRB. The advice of the secretariat should be sought in all such cases.

23.’Maximum potential adjustment’ is the adjustment to expenditure, receipts, profits, losses, income or gains that would arise if the risk to which it relates were conceded in full to HMRC. It is calculated without reference to the strength of the arguments or the prospects of success and is the gross amount of the potential adjustment taking no account of losses or other reliefs.

24.’Resolution’ of any dispute means any decision to resolve that dispute on a particular basis, and includes a decision to take steps that are likely lead to the commencement of litigation, or cessation of litigation before a case has been decided by a First-tier Tribunal. Decisions on litigation beyond the First-tier Tribunal are subject to a separate process and are not within the remit of CCG DRB. Resolution proposals should be construed accordingly.

Part 3: CCG DRB operations

Chair

25.The chair of the CCG DRB will be the Director Large Business or where necessary any Deputy Director who is a member of the CCG DRB may deputise.

Members of the CCG DRB

26.Members of the CCG DRB are:

• Director Large Business (Chair)
• Deputy Director Wealthy and Mid-Sized Business Compliance
• Deputy Director, Individuals and Small Business Compliance
• Deputy Director Business, Assets and International
• Deputy Director, Counter-Avoidance
• Deputy Director, Solicitor’s Office and Legal Services
• Deputy Director, Indirect Tax Policy
• Deputy Director, Individuals Policy
• Deputy Director, HMRC Strategies
• Deputy Director, Fraud Investigation Service
• Deputy Director, Large Business
• Deputy Director, Large Business, Dispute Resolution and Governance

27.Where directorates are restructured or renamed an equivalent membership will be maintained.

Deputies

28.Members may be represented at board meetings by a deputy. That deputy should, where possible, be at Senior Civil Service (SCS) level and will normally be appointed by the Deputy Director of the relevant business area.

Quorum

29.°Õ³ó±ðÌýCCG DRB shall not be authorised to make decisions unless there are a minimum of five board members present at a meeting.

Conflict of interest

30.Before any risk is discussed, any person who is present at a CCG DRB meeting will declare any conflict of interest. In this context a conflict of interest is deemed to include any prior contribution to resolution discussions with the customer or prior involvement with the HMRC team as to the basis on which the risk might be resolved. Conflicts of interest are to be clearly noted.

Additional members at the CCG DRB

31.The chair may invite additional members (not within the list at paragraph 26) to attend CCG DRB meetings to support the governance process as required. This includes where a risk has been referred to the CCG DRB from an area of the business not represented by the members listed above, or where there is a significant stakeholder interest.

Decisions by correspondence

32.The Chair will decide when a matter might be dealt with by correspondence rather than by discussion at a CCG DRB. This will be rare and will be reserved for the most straightforward cases where an urgent decision or advice is required. Where CCG DRB business is dealt with by correspondence all of the above rules will equally apply.

Arrangements for meetings

33.Meetings of the CCG DRB will be held monthly or at such times as the chair may decide.

Sample cases

34.°Õ³ó±ðÌýCCG DRB will refer to the Commissioners an appropriate number of the risks considered by the board as sample cases in order that the Commissioners can fulfil their remit to consider a sample of cases from the CCG DRB.