This guidance is for the use of business customers. The current service for non-business customers continues. Non business customers should refer to the guidance at Clearances and Approvals 1.
Business owners who would like make clearance applications in relation to Inheritance Tax business property relief (IHT-BPR) should see the separate guidance Inheritance Tax clearance service for business.
In developing the new Clearances Service we wanted to provide a facility that was as useful as possible for UK business as a whole. To do this within our resources, we have focused our efforts on where the benefit is greatest. There are a wide range of potential applications, from issues that are clearly new to those which are almost without doubt. HMRC wants therefore to work in partnership with businesses and their representatives to ensure that as far as possible those issues brought forward for clearance are the ones that have the greatest impact on the business concerned. Developing a common understanding on this will be an ongoing process between HMRC and the users of the service.
The purpose of the new Clearances Service is:
We will therefore aim to provide clearances:
HMRC and users of the Clearances Service will:
This guidance sets out what you need to do to make a clearance application, and what information you need to provide. It includes information for business customers across all of the taxes that was previously set out in CAP1 and Code of Practice 10.
Customers who would like advice on personal tax issues should continue to refer to Code of Practice 10. General guidance on other help and advice available from HMRC is set out at Annex B.
Non-statutory clearances
A non-statutory clearance is written confirmation of our view of the application of tax law to a specific transaction or event that you can rely on in most circumstances, as our view of the tax consequences of your transaction.
We will aim to send you our view within 28 calendar days, though in complex cases this may take longer. We will provide clearances across all business taxes, regardless of the age of the legislation, where you have demonstrated that:
We will provide non-statutory clearances both:
Clearances do not alter the tax treatment but simply give you HMRC's view of what the correct tax treatment is.
Statutory clearances
There are a few statutes where tax law provides that HMRC will give a clearance relating to a specific point. These are referred to as 'statutory clearances' and they are outside the scope of this guidance.
For contact details and a comprehensive list of statutory clearances, please go to the link below. It is helpful if applications for non-statutory clearances are submitted separately to statutory clearances, to speed up the handling of your applications.
You may wish to write one clearance application letter to cover both non-statutory and statutory clearance applications, but you should ensure that copies are sent to all relevant teams. Where you choose to do this, please ensure it is clear at the front of your letter which teams copies of your letter have been sent to.
Seeking clearance or approval for a transaction
Statutory approvals
A statutory approval is different from a statutory clearance. Approval can be required in advance for a particular tax treatment to apply to a particular issue that can have wide reaching consequences, and the tax treatment changes according to whether an approval has been given or not. For example, statutory approval for the beneficial tax treatment of certain employee share schemes. For contact details on statutory approvals, please go to the link below.
Seeking clearance or approval for a transaction
Customers who can use this service
Clearance applications will be accepted from businesses and their advisers where there is demonstrable material uncertainty about the tax consequences of transactions affecting their business. We do not intend that this encompasses applications which clearly fall within the area of personal taxation of individuals (such as Inheritance Tax or the residence status of an individual director) or routine product endorsements.
Please note that we are unable to provide clearances on employment contract matters (for example, changes in the balance between salary and benefits) or where the provision of a clearance would encroach on taxpayer confidentiality. However, in salary sacrifice cases you may ask for confirmation of the correct tax treatment of the arrangement once it has been put in place. These should no longer be sent to the local office but emailed or posted to the HMRC Clearances Team in Southend as detailed below. In general we will not give clearances on draft legislation which has not been passed by Parliament.
The current service for non-business customers continues. These customers should refer to the existing guidance at Code of Practice 10 or CAP1.
Normally, for VAT clearances, it is the supplier who should ask for a clearance on a liability to tax of goods or services. However, the clearance should not vary in circumstances where the same question and facts are set out by the recipient of the supply. If the enquiry relates to tax recovery, then it is the recipient of the supply who should make the clearance application.
When you may choose to apply for a non-statutory clearance
We aim to make the guidance that accompanies our taxes legislation as clear as possible. If you feel that the guidance does not make clear how the legislation will apply in a particular situation you can make a non-statutory clearance application.
Please read our guidance on the legislation before applying for a non-statutory clearance, and then read through the checklist in Annex A. The checklist will help you consider all the information that could be relevant to your particular application and to arrange the information so that we can progress your application as quickly as possible. Please attach the checklist, completed as appropriate, with your application.
To discuss your tax affairs or get tax information, including a wide range of leaflets that explain different aspects of the tax system, please see the information contained in the Contact Us area of our website.
In addition to non-statutory clearances HMRC makes available a wide range of information and advice to our customers. These are set out at Annex B. You may also wish to speak to your adviser.
Where to send your non-statutory clearance
Applications should be sent to:
Email: HMRC Clearances Team
We will be able to process your application more efficiently if you send your clearance application by email. Attachments to emails should be no larger than 2 MB. Please don't send self-extracting zip files as our software will block them.
Using email
Please attach the checklist in Annex A, completed as appropriate, along with the information and any supporting documents that explain your clearance application. If you do not email your application to us, please print the checklist as a cover page and send all the documents to your designated contact above.
We recognise that many clearance applications contain commercially sensitive information and we will handle all information included in clearance applications securely and in accordance with our legal obligations. Whether you send us information electronically or on paper we will keep it secure, and not disclose it to anyone unless they are authorised to see it.
For an application that you consider particularly sensitive you may wish to notify us in advance, so that we can agree about how best to submit your application to us. If your tax affairs are dealt with by the Large Business Service please call your Client Relationship Manager.
For a clearance to be binding on us you must provide us, at the time the clearance is sought, with the full facts and context of the transaction, and set out the legislative uncertainty in question. The courts have said that the customer must 'put all of their cards face upwards on the table' (See Note 1). You are responsible for ensuring the information is correct, accurate and complete.
The information that you provide will depend on the circumstances of the clearance application. You need to decide what information is relevant to your application. Please include a heading to your clearance application that includes the name and address of the business customer and ensure that your application is clearly headed as a non-statutory business clearance application.
The checklist at Annex A and the guidance in this section will help you decide what to provide so that we have the relevant information we need to process your application quickly. The guidance sets out guidelines as to the information to provide. We do not expect that all the information we list will be available or relevant for every clearance application. It minimises the burden for you and for us if you provide summaries of the relevant information, rather than a large volume of supporting documents.
Please supplement this with more detailed explanations, drawing attention to the relevant paragraphs in any supporting documents you provide.
Information about the applicant
Please set out this information at the start of your clearance application.
We will need to understand who is carrying on the business, including:
Information about the transaction(s)
It helps us to handle the application efficiently if you set out the nature of your clearance request at the start - for example, in the heading or first paragraph. Please follow this with:
Please note that if the request relates to one specific part of a series of connected transactions we expect you to provide a summary of the series of transactions as part of the facts about your transaction.
Information about the commercial background
Please explain the context of the transaction and the reasons you are undertaking it, providing details of any connected transactions as appropriate. Please also:
Information about legal points
Please set out your view of the tax consequences of the particular transaction, with a summarised explanation of your reasoning, and the full details of the question and issue on which you want a response. Please:
Note1: The quote originates from R v IRC (ex parte MFK Underwriting Agencies Ltd) [1989] STC 873.
Information about the disclosure of a tax avoidance scheme that covers all or part of the transaction
When submitting a Non-Statutory Business Clearance application for a transaction for which there is also the disclosure of an avoidance scheme which covers all or part of the transaction, it is important that explicit mention is made of any related disclosures, preferably by including a copy of the disclosure or, where available, by reporting the allocated Disclosure of Tax Avoidance Schemes (DOTAS) scheme reference number.
If your application for a clearance is accepted
We will acknowledge your application on receipt and send our full response within 28 calendar days as the norm. Our response will either:
Where we reject your interpretation we will set out reasons for this. Once we have provided our response, you are entitled to act on the basis of our view, or on the basis of your own view of the appropriate tax treatment, and self assess accordingly.
Very occasionally we may not be able to send our full response within 28 calendar days. This may be, for example, because the application is very complex and requires advice from a number of specialists within HMRC. Where this is the case we will tell you, and work with you to provide a response as soon as we can.
Sometimes we may need to ask you to provide more information before we can send you a full reply. If we need to ask you for more information, we will suspend the handling time for your application until you are able to provide us with the information we have requested. We may wish to contact you by telephone for clarification, and it helps us if you can provide a regular contact point during the period of your application.
If your application for a clearance is not accepted
We will, as soon as possible after receipt of your application, either:
Circumstances when we will not accept your clearance application
We will not accept your application:
Where you are not happy about the way we handled your application
We aim to send clear responses to the questions raised in your clearance application. We recognise that sometimes you may not agree with the response you receive from us, or you may not be happy with the service we have provided.
If you believe that we have failed to take account of some of the material facts set out in your application please contact the officer who dealt with your case (the details will be on the correspondence we have sent you) and ask that they look at your application again. If you remain unhappy you can ask to be referred to the complaints manager.
If you are unhappy with the way we have handled your affairs, for example because of delays or mistakes, please tell the person or office you have been dealing with. If they are unable to sort things out, ask for your case to be referred to the complaints manager.
Interest and penalties where you asked us for a clearance
If you have applied for a non-statutory clearance, but have not received it by the time that your return is due to be submitted, then your return must still be sent in before the time limit. If that happens you should complete your return according to your own view of the correct tax treatment of the particular transaction. If you have filed a Self Assessment return you can amend it after we have given the clearance, if you wish, subject to the normal time limits.
The normal interest and penalty rules will apply if a return is incorrect, whether or not the transactions have been the subject of a clearance.
If you disagree with the clearance that we gave you and complete your return in accordance with your own view of the proper tax treatment, then it may turn out that you have not declared nor paid enough tax at the right time. Regardless of whether you had applied for a post transaction clearance or whether we had given a clearance by the due date, any unpaid or undeclared tax carries interest in the normal way. Similarly, any overpaid tax carries repayment interest from the date it was paid wherever this is usually the case.
Appeals against clearances
There is no general right of appeal against advice or clearances given by HMRC except where rights to appeal are set out in statute. For example, there is a right to appeal to the independent tax tribunal under Section 83 of the VAT Act 1994 about the amount of VAT chargeable on a specific supply of goods or services. An appeal under this section can only be made if the supply has taken place.
If you disagree with any appealable decision you have been given you should write to us and tell us within 30 days. You can ask for the appealable decision you have been given to be reviewed or can appeal direct to the independent tax tribunal. More information on your rights to review and appeal are set out in the HMRC factsheet HMRC1: HM Revenue & Customs decisions - what to do if you disagree (PDF 73K)
General principles
A clearance applies:
We aim to provide clearances that will give certainty to business as to the tax consequences of their transactions. Our starting point is therefore that you should be able to rely on any clearance we provide. However for a clearance to be considered binding on HMRC, you must set out all the relevant facts and draw attention to all the issues in your application. We expect businesses to interpret this relatively broadly, for example, by providing information on related transactions where relevant.
Under our existing powers of 'collection and management' (See Note 2), the principles of administrative law apply and the Courts will ultimately determine if we are bound by a clearance we have given. The underlying principle is that HMRC has a duty to collect the correct amount of tax as required by statute. In the vast majority of cases a clearance we give will be correct in law and therefore binding on HMRC. However there are some circumstances in which our primary duty to collect tax according to the statute may mean that we can no longer be bound by a clearance we have given. For example this may occur where:
Note 2: Section 5 of the Commissioners for Revenue and Customs Act 2005
Where HMRC makes an incorrect statement
There may be a small number of cases where we provide a clearance that is incorrect in law. Where this happens, we will be bound by such advice provided that it is clear, unequivocal and explicit and you can demonstrate that:
Where this is the case, to apply the statute may be so unfair that it could amount to an abuse of power. But, where we have given an incorrect clearance, our primary duty will always remain to collect the correct amount of tax as required by the law and therefore there will be some circumstances when we would not be bound by the advice we have given. All cases will be subject to any statutory time limits.
Where we provide you with an erroneous clearance that is binding on us and subsequently notify you that it is incorrect, the established legal position (See note 3) is that you will only be required to start accounting for tax on the correct basis from the date of notification.
Note 3: See for example F & I Financial Services Ltd [2001] STC 939 and Al Fayed and others v Advocate General for Scotland [2002] STC 910.
Please use this checklist (PDF 29K) when deciding which document to attach to your email application, or print and include as a cover sheet where you do not send it electronically.
Check that you have included information that is relevant and available for your clearance application and indicate with a tick, items that are included. It helps us if you follow the order set out below in your clearance application letter and follow the same order in grouping any supporting documents.
In addition to non-statutory clearances HMRC makes available a wide range of information and advice to our customers.
To discuss your tax affairs or get tax information, including a wide range of leaflets that explain different aspects of the tax system, please see the information contained in the Contact us area of our website.
For general advice on VAT, Excise and Customs, please ring our Helpline on Tel: 0845 010 9000.
For general queries on IR35 intermediaries legislation, please contact Tel: 0845 303 3535
For general advice on other matters, please ring the Client Relationship Manager (CRM) or Customer Manager (CM) that handles your tax affairs. If you do not have an established contact within HMRC, then please visit the Contact us area for the number of an appropriate helpline. You will find it helpful if you prepare for the call by having to hand a clear explanation of your question and relevant details.
Please check the contact details provided.
Please check the contact details provided.
Please see a list of all our statutory clearances and contact details .
Non routine publications that explain our interpretation of legislation and the way we apply the law in practice.
Relaxations of the law that give a reduction in tax liability that you would not be entitled to under the strict letter of the law.
Published on the News Distribution Service website (Opens new window) to announce proposed changes in the law or in our practice, or any other changes or initiatives of interest to the public.
A range of publications in relation to VAT, Customs and Excise.
Regular publications which include announcements advising of policy changes resulting from legislation, litigation or internal policy reviews.
The internal guidance manuals our staff use.
