What are standstill agreements?
A standstill agreement between HMRC and a taxpayer acts to freeze the time limits for collection of National Insurance Contributions (NICs).
Whilst tax has specific legislation covering assessable time limits and the opening and closing of enquiries, NICs do not. NICs are covered by much broader legislation in the Social Security Act 1998. This means that whilst HMRC can raise a Section 8 NICs decision at any time, it cannot be enforced for collection if the six-year time limit has expired.
In order to protect this time limit from expiring, HMRC previously went through the process of a County Court claim. Both sides would essentially agree that the matter had not yet been finally determined by settlement or a Tax Tribunal hearing and the Court would stay proceedings. This was often the process for long running enquiries and disputes, particularly in the tax avoidance scheme arena.
Why are HMRC asking for standstill agreements instead?
In recent years, HMRC have been charging the cost of their County Court proceedings to taxpayers under settlement agreement terms. These fees can run into the tens of thousands for complex schemes under dispute. Instead, HMRC are now giving taxpayers the option to agree to standstill the time limit and not incur the cost of their (and often HMRC’s) court fees.
Many arrangements that are being investigated by HMRC and were subject to assessments under the loan charge in 2018/2019, have expiring NICs time limits in April 2025. HMRC are therefore writing out to all participants to give them the option of entering into a standstill agreement (sometimes called a stand over agreement).
Receiving such a letter now is a strong indicator that you (or your clients) would benefit from specialist advice on options for resolving long running HMRC disputes or legacy avoidance arrangements.
How we can help
Our tax risk & dispute resolution specialists at Wilson Wright, part of BKL, are highly experienced at resolving disputes with HMRC quickly and cost-effectively.
For a confidential, no-obligation discussion on how we can help you or your clients, please get in touch.
You can also directly contact our Tax Dispute & Resolution Partner, Jessica McLellan, at:
07808 728 483
[email protected]