VRS7300 | Bespoke schemes: practical guidance: Scheme provision for resolution of a dispute

A bespoke scheme can include a provision which allows either party to give notice that they are unhappy with an aspect of the scheme, and to terminate application of that aspect pending agreement. As this is likely to reduce the extent to which a scheme can provide certainty for both parties, such clauses should always be discussed carefully with the business.

Best practice is only to insist on such a clause at the most complex businesses, or where there is a history of frequent changes, either in scheme operation, or in business circumstances. The following example comes from an actual agreement letter.

‘Either party may, at any time during the life of this agreement, give written notice to the other that they wish to review any individual part of it. Whilst any such review is in progress, the rest of this agreement will continue to operate as normal. If, once the review is completed, both parties agree that amendments are appropriate, these will be brought into effect from the beginning of the next VAT return period following the date that the written notice was given.’

The timing of any withdrawal of a particular aspect of a scheme must follow the principles in VRS7600.