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.
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