Alternative Dispute Resolution
Following the initial pilot in North Wales and North West England, HMRC are now in a position to accept ADR applications in London and South Wales/South West England.
ADR involves a facilitator from HMRC, who has not been involved in the dispute before, and who will work with both the taxpayer and the HMRC case owner to try to broker an agreement between them. HMRC consider that ADR has proven to be an effective way of resolving tax disputes.
In this stage of the trial, ADR will only be available to SME customers, where a tax issue is in dispute, but before an appealable tax decision or assessment has been made by HMRC.
ADR covers both VAT and direct taxes disputes, and entering into the ADR process will not affect the customer's existing review and appeal rights.
HMRC suggest that the process might be useful to progress matters such as;
- Restoring communication
- Clarifying the facts
- Obtaining more suitable evidence
- Issues capable of further mediation e.g. clarifying assumptions
- Obtaining a better understanding of the arguments
The process can be used for both direct tax and VAT disputes. Whilst any attempts by HMRC to resolve issues are to be welcomed, clients are generally advised to lodge appeals within the statutory time limits. The process is currently limited to SMEs.