Compensation & Benefits: Incomplete disclosure of facts may result in both formal and informal tax rulings being withdrawn

January 3, 2010

In a recent VAT case, the High Court has ruled that taxpayer’s
application for judicial review of HMRC’s decision to withdraw its VAT
ruling with retrospective effect, because the taxpayer had failed to
make a full and accurate disclosure of material facts, should be

HMRC’s Code of Practice 10 sets out when HMRC will provide
information and guidance on the interpretation of tax law (see Resources


This case will be of interest to those seeking to obtain certainty
of the tax treatment of particular arrangements, in advance or post
transaction, by relying on both statutory and non-statutory rulings and
clearances from HMRC, for example in relation to Enterprise Management
Incentive schemes and share valuations.

It is clear from the decision, as would be expected, that a taxpayer
may only rely on any type of clearance or ruling from HMRC if full and
accurate facts are disclosed to HMRC, not only at the time when a ruling
is being sought but also subsequently if any material changes occur.

Failure to correctly detail the circumstances and practical
operation of the arrangements could result in a ruling being withdrawn
by HMRC or rendered void ab initio, with a potentially significant
associated cost if the tax treatment applied is subsequently determined
by HMRC to be incorrect.


(on the application of The Medical Protection Society Limited) v HMRC
[2009] EWHC 2780 (Admin)

Code of Practice 10

HMRC clearance
service for businesses

For further information or to discuss the issues raised, please contact Guy Abbiss (
or Libs Davies ( on +44 (0) 203 051 5711.


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