Alternative dispute resolution (ADR) allows tax disputes to be revisited and resolved faster using an independent facilitator to mediate discussions between the taxpayer and the HMRC caseworker. Traditionally the vast majority of tax disputes are settled by agreement and where agreement cannot be reached cases are brought to conclusion through litigation.
ADR provides taxpayers with an alternative way of seeking to resolve disputes in compliance checks, and covers both VAT and direct tax disputes. For small and medium-sized enterprises, and individuals, the facilitator will be a person from HMRC who has been trained in ADR techniques and has not previously had any involvement in the dispute. The facilitator works with both the taxpayer and HMRC officer, in an open and flexible way, to broker an agreement to settle the dispute.
ADR is currently being trialled, the trial being open to all taxpayers, with applications for ADR continuing to be considered until 30 November 2012. To date, nearly 70% of all applications for ADR have been accepted.
What are the benefits?
The clear benefit of ADR is that it may shorten the time to conclude a dispute without having to take an appeal to the Tribunal, potentially saving both time and costs.
The process provides an opportunity for any area of the dispute to be revisited and for all arguments and evidence to be reviewed, including any new evidence or arguments either party wishes to put forward. The taxpayer's representatives can act in the ADR, and experience to date has shown that the dispute usually takes two months or less to either resolve, or reach the stage where both parties agree to differ.
Taking part in ADR provides a real opportunity to settle difficult and long-standing disputes, where negotiations have stalled or reached an impasse. If not successful in bringing matters to a conclusion, participation will not prejudice the taxpayer's statutory rights of review or appeal, and there is, therefore, little downside to engaging in the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
