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HMRC Settlements – When Is An Agreement Reached?

In the recent case of Kyte v HMRC, the High Court dismissed a claim asserting that email communication with HMRC amounted to a legally binding contract.


The claimant, Mr Kyte, had invested over a million pounds in a tax avoidance “film scheme” known as Scion Structured Products (“the Scheme”) which involved the purchase of rights in the “Frost-Nixon” film.

Following HMRC’s enquiry into his tax avoidance arrangements and a subsequent invitation to discuss a settlement opportunity, Mr Kyte sought a declaration from the High Court that his email communications with HMRC, regarding the amount of unpaid tax that was due, amounted to a binding agreement.


The High Court dismissed the claim largely because the relevant email response to HMRC by Mr Kyte’s adviser requested a settlement deed and sought permission for a nine-month payment period, making it clear that there were further terms to be negotiated. The High Court further considered that an email simply containing tax calculations with regards to a proposed settlement could not reasonably be considered to be a formal settlement offer from HMRC.


The above case should highlight to tax payers and their advisers that until a formal agreement is reached with HMRC, usually by a settlement deed, any communication regarding the amount of tax due cannot be guaranteed.

Following the introduction of tax legislation in 2014, HMRC has had the power to issue Accelerated Payment Notices (APNs). APNs require tax payers who have been involved in some form of tax avoidance arrangements in the past to immediately pay any tax liability that the HMRC considers to be outstanding. These make settlement opportunities more attractive as they may well include a possibility to agree a reasonable payment period with HMRC.

Pett Franklin are experienced in negotiating settlements with HMRC, and look to achieve the best possible outcome for taxpayers while bringing matters to a clear and final conclusion on all sides. We are also able to provide practical guidance for taxpayers concerned about their tax affairs.

For more information about how we can help you, please contact Stephen Woodhouse by calling 0121 348 7878.