The tax legislation providing allowances and reliefs to a transaction can be complex, and applying those rules to a particular situation or transaction is a complicated process; in many cases, no clear answer arises from such an analysis.
In this situation, it is possible to make an application to HMRC for advance clearance that the proposed transaction will be treated in a particular way by the legislation.
For certain reliefs, there is a particular clearance process within the legislation (statutory clearance), but for matters where there is no such provision, you can make an application under the non-statutory clearance route so that HMRC give their opinion of how the legislation applies to your transaction.
In both statutory and non-statutory clearance, the application is a ‘cards on the table’ moment; you must give full disclosure of the relevant facts of the intended transaction, the legislation in question and how you believe that legislation applies to the transaction. HMRC will then give clearance based on that information. However, if the transaction differs from the information provided then the clearance cannot be relied upon. If HMRC refuse clearance, they will state the reason, which allows you to amend the proposed transaction, if possible, so as to better fit with the legislation.
Tax Innovations has helped numerous clients with applications for both statutory and non-statutory clearance and so can help to ensure that when such assurance is given by HMRC, that you can rely upon it.