When you can rely on information or advice provided by HM Revenue & Customs (HMRC)

This guidance sets out where you can rely on information or advice you receive from HMRC. Code of Practice 10 and VAT Notice 700/06 VAT rulings provide details of where you can get advice from HMRC.

Who this guidance is for

This guidance is relevant to all customers who receive information or advice from HMRC. It applies to advice we provide relevant to all taxes we collect and payments we administer.

Information or advice you receive from HMRC applies:

  • to the applicant (even where the application has been made by the applicant’s adviser
  • to the particular transaction that was the subject of the request for advice

Or

  • as stated in the information where it takes the form of Guidance or Public Notices

There is no general right of appeal against advice or information we provide except where rights of appeal are set out in statute. The information and advice we provide is aimed at helping you to understand your obligations, liabilities, entitlements or the consequences of your transactions. You are not required to act on the basis of our advice for example when completing a return or paying tax.

General principles

We aim to provide information and advice that will give certainty to our customers as to the tax consequences of their transactions, their obligations or liabilities and entitlements. Our starting point is therefore that you should be able to rely on any information or advice we provide. However for information or advice you have received to be considered binding on HMRC, when contacting HMRC you must set out all the relevant facts and draw attention to all the issues. This has been described by the courts as the need for the applicant to place all his cards face up on the table. We expect you to interpret this relatively broadly, for example, by providing information on related transactions where relevant.

Under our existing powers of ‘collection and management’ (Section 5 of the Commissioners for Revenue and Customs Act 2005), the principles of administrative law and the Courts will ultimately determine if we are bound by advice 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 advice 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 advice we have given.

For example, this may occur in the following circumstances:

  • for pre-transaction advice, where the nature of the transaction changes in a way that has a material impact on the transaction as a whole
  • where you provided incorrect or incomplete information when you requested advice from HMRC
  • when a Court or Tribunal judgment changes the prevailing interpretation of the law on which the advice was based and your liability to tax for that period has not been finalised, for example, where you have not yet submitted your return or, if you have submitted your return, where the opportunity to amend that return remains. Advice will be based on the prevailing understanding of the law at the time it is given. Where the Courts change the prevailing interpretation of the law, subject to the principle of legitimate expectation, we are required to collect the correct amount of tax as required by the new interpretation of the law
  • when the statutory law relevant to the transaction for which the advice was given changes. If this change is retrospective, we will not be bound by any advice we have previously given. This situation occurs very infrequently. If the new statute is enacted pre-transaction and is prospective, any earlier advice relating to the transaction will not be considered to be binding. HMRC has a duty to collect the correct amount of tax as required by statute at the time the transaction takes place. It remains your responsibility to take account of changes in the law.

Where HMRC provides incorrect information or advice

There may be a small number of cases where we provide information or advice 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:

  • you reasonably relied on the advice
  • where appropriate, you made full disclosure of all the relevant facts
  • the application of the statute would result in your financial detriment

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 incorrect information or advice, 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 where we will not be bound by the advice we have given.

Where we provide you with erroneous advice that is binding on us and subsequently notify you that it is incorrect, the established legal position is that you will only be required to start accounting for tax on the correct basis from the date of notification.

Misunderstanding

There may be certain circumstances where you have misunderstood the law and applied the wrong tax treatment when carrying out a transaction or providing information or payment to HMRC. In these circumstances, the wrong amount of tax has been collected. As HMRC has a duty to collect the correct amount of tax as required by law, the situation must be rectified for the past and for the future in order to ensure that the law is applied correctly. However, in rectifying the situation, HMRC will be bound by considerations of public law for example to treat taxpayers fairly.