In general, HMRC do not reimburse the taxpayer for the costs of compliance even where investigations into the taxpayer’s affairs prove abortive. HMRC also doubt a taxpayer’s legal claim to refund of any amount agreed in settlement of investigation cases but indicate that an ex-gratia payment would be considered where, in the case of formal assessments, claims for relief would be admissible (see ¶185-925).

However, HMRC will make an ex-gratia payment of compensation to a taxpayer who has been financially prejudiced by an error on HMRC’s part.

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