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Lessons from Southern Cross on binding settlements with HMRC

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Southern Cross Employment Agency Ltd [2014] UKFTT 088 (TC) considers HMRC’s ability to change its mind after a claim is finalised and paid. The tribunal held that, in a reasonably informal exchange of emails, HMRC had made a contract never to reopen the issue. Accordingly, a later assessment by HMRC, following its changed view, was invalid. This appears to be the first decision to treat HMRC as bound in this way by an agreement which did not require payment of tax. In addition, on the tribunal’s approach, detail of the wording of HMRC correspondence will have significant effects.

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