The first report by HMRC's Tax Assurance Commissioner detailing the new approach to resolving disputes with taxpayers was published last month.

The new code for resolving tax disputes was issued last November. The role of the Tax Assurance Commissioner was announced in February 2012, as part of a package to strengthen HMRC's governance arrangements in response to concerns about how tax disputes were handled.

The report now issued shows that, for the period August 2012 to March 2013 there were 31 referrals to the Tax Disputes Resolution board, with a total of £2bn tax at issue. Thereafter the Tax Disputes Resolution Board referred 22 cases onwards to the Commissioners for a decision. Eleven proposals by taxpayers worth £1,368 million were accepted, six proposals by taxpayers worth £285 million were accepted with conditions, and five of the proposals worth £398 million were rejected.

Under the Code of Governance for Resolving Tax Disputes, three Commissioners now make decisions in cases classed as sensitive (those with more than £100 million tax under consideration – a reduction from the previous £250 million threshold) and in a sample of cases where the tax involved is at least £10 million, but less than £100 million.

The report also includes illustrative case studies, HMRC's approach to issues affecting multiple taxpayers and details of significant litigation in 2012/13.

As part of the new approach, HMRC also committed to carrying out a programme of reviews of the governance processes used in a sample of settled cases. A pilot of this work was carried out in the second half of 2012-13 with the full programme starting in this tax year. HMRC highlight that this particular review programme is in addition to quality assurance programmes already in place in their business areas.

In 2012-13 HMRC established the methodology for the programme of reviews and tested it in this pilot programme, where 213 settled cases from 2011-12 were reviewed, drawn from Local Compliance and Specialist Investigations in Enforcement and Compliance and the Large Business Service in Business Tax.

The report therefore contains an overview of findings and lessons learned from this work. The pilot programme tested the processes followed in the cases against a set of common governance criteria, reflecting what governance processes were required at the time the case was settled.

The pilot found that in the majority of cases (195 out of 213) there was “satisfactory” adherence to governance processes in place at that time. There were 18 cases where HMRC had not followed all the processes relevant to the case, and these broadly related to two areas:

1. process involved in the application of penalties
2. processes for recording yield and the future impact on revenue.

As a result actions are now being taken by HMRC to address these including:

• Developing improved guidance on the operation of penalty processes, including the streamlining of the penalty authorisation process and development of support tools.
• Face-to-face training for all caseworkers and managers on penalties.
• Developing improved guidance on the recording of yield, with feedback processes established so staff can raise issues, suggest improvements and identify gaps as they use the new yield system.
• An on-going programme of workshops/surgeries to assist caseworkers on penalties, settlements and emerging issues.
• Placing an increased emphasis on improving audit trails.