LSS30300 - Handling a dispute: Setting out the points in dispute

To focus future discussions with the customer you are in dispute with or their agent, you should clearly set out the point or points in dispute as early as possible. This will help both sides to see what facts are likely to be relevant in resolving the dispute and what information or documentation will be needed to establish those facts.

So you must explain

• the risk or risks that you think exist, and/or

• the nature of any identified issues.

Risks and Issues

A dispute may arise either because of a risk that we have identified, or because of a disagreement about a fact, which then may become an issue in a dispute, or both. For example, a risk we have identified about the treatment of a transaction may result in a dispute about our interpretation of how the law should be applied. Both risks and issues can be identified before we start, or during, the compliance check. See ‘What is a Dispute’ at LSS20300.

You should share sufficient detail about any risks and issues that could result in a dispute, so that the person with whom you have the dispute can understand what we are checking and why. This will put you in a better position to discuss this further and to establish what any tax consequences might be and whether there is a specific dispute that needs to be addressed and resolved.

A dispute may arise as a result of a breakdown in communication. For example, a dispute could be about how much we should tell the customer in order for them to understand why we think there is a risk; or what are reasonable lengths for us to expect the person to go to in order to provide information or an explanation that will satisfy us.

You should tailor your explanation to the circumstances and in particular the person’s likely knowledge of the risk or issue. The best way to do this is to try to put yourself in their position and think about what you would want to know. For example, while you might quote a relevant statutory point to a professional agent who will understand the tax implications, you might give a simpler, step by step explanation of the law and how it applies to a person who has little or no tax knowledge.

If you are asked for a clearer or fuller explanation, you should give this promptly when you are able to do so. You may not always be able to do this, for example, where you cannot disclose a source of information for confidentiality reasons. You must follow the operational guidance in relation to these matters, as appropriate.