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»Ê¹ÚÌåÓýapp definition which we use when announcing Statements of Practice is:

"Statements of Practice explain HM Revenue and Customs interpretation of legislation and the way the Department applies the law in practice. »Ê¹ÚÌåÓýappy do not affect a taxpayer’s right to argue for a different interpretation, if necessary in any appeal to an independent tribunal."

»Ê¹ÚÌåÓýapp main purpose of Statements of Practice (SPs) is to explain the Department's view of the law where the statute is unclear and may have more than one interpretation or where HMRC considers it would assist taxpayers to have an explanation of HMRC’s view of the law. »Ê¹ÚÌåÓýappy let taxpayers know which interpretation we will follow.

Our interpretation should be that which most closely reflects the intention of the legislation. It must be one which HMRC can reasonably apply and defend if challenged in the courts. That does not mean it is the only possible interpretation; there may be another, or others, which we reject. »Ê¹ÚÌåÓýapp reason for taking the line we do in any particular set of circumstances must be reasonable and defensible.

It is open to anyone to challenge our interpretation but they must usually do so through the courts. If the courts uphold our interpretation then we need take no further action. If they do not we may need to consider whether to apply the court's interpretation or whether to ask Ministers to legislate a change in the law.

If a taxpayer has irrevocably made or changed his or her arrangements in reliance on an SP, the Department will keep to that interpretation in dealing with the tax consequences of those arrangements. So, if we decide to change our interpretation, as sometimes happens, we must publish any change and the date from which it is to apply (again normally by means of a SP) before we can apply it; and it will apply only from that time onwards. »Ê¹ÚÌåÓýapp precise timing for introducing any change will depend on the circumstances. Some changes may have immediate effect; others may be from some future date.

We also use SPs to:

• Make substantial statements of the way we administer parts of the tax system (such as returns, repayment claims, investigation settlements or time limits),
• Say how HMRC will exercise a statutory discretion, and
• Describe a practice which has no statutory foundation (other that the Board's powers of collection and management) but which is not, in essence, concessionary.

SPs are different from Extra-Statutory Concessions and Codes of Practice - which are explained elsewhere in this manual.