If you rely on a private ruling
You rely on a private ruling by conducting your affairs in a way that is consistent with the facts set out in your ruling.
If you do so, the effect of a private ruling is that it protects you against liability for tax shortfall even if the ruling is incorrect. The false and misleading statement penalty and interest charges are also not applied in these circumstances.
If the private ruling is incorrect, we can only apply the law correctly if this would give a more favourable result for you.
When your private ruling won't protect you
We are not legally bound by a ruling, and it will not offer you any protection against tax shortfall, penalties or interest, in the following circumstances:
- If there is a material difference between the scheme described and what actually occurs, that is, the facts or circumstances as set out in the ruling change, or are not implemented in the way set out in the private ruling, the private ruling doesn't apply.
- If we've made a ruling about a provision of the law and the provision is amended, the ruling is taken to be about the amended provision to the extent that it expresses the same ideas as the old law. However, if the law is substantially changed, the part of the ruling dealing with the changed law ceases to apply. Normally a private ruling will not cover an extended period of time for this reason.
- Where you already have a ruling on the same matter, for the same period, and you have not told us about it, the latter ruling will be taken not to have been made.
- If another ruling revises or changes a ruling before you begin the arrangement described in the ruling, and before any income year or other period stated in the ruling starts, then that ruling does not apply.
If you don't follow a private ruling
If you disagree with your ruling, and choose not to follow it, and the position you adopt is shown to be incorrect, you'll be required to:
- pay any underpaid tax
- repay overpaid grants or benefits
- pay any interest owing on those amounts.
You may also be required to pay a penalty on the underpaid tax or overpaid grant or benefit if you don't have a reasonably arguable position or have not taken reasonable care.
Private rulings relating to assessments
If we give you a private ruling that affects an earlier assessment, we will not automatically amend your assessment.
Assessments and amendments are part of the self-assessment system – this means that taxpayers and tax agents must ask us to amend any assessment affected by a private ruling.