Individuals and small businesses havea new opportunity to resolve disputes with HM Revenue & Customs: The Alternative Dispute Resolution Service (ADR) aims to resolve disputes without having to go to the Tax Tribunal.
ADR uses so-called “independent HMRC facilitators” to resolve tax disputes between HMRC and taxpayers during a compliance check, before a decision or assessment has been made. The facilitators are HMRC members of staff who have been trained in ADR techniques and have not previously been involved in the dispute. The taxman says: “ADR aims to find a fair and quick outcome for both parties, helping to reduce their costs and avoid a tribunal”.
The aim of ADR is for the HMRC facilitators to help all parties reach a shared and full understanding of the disputed facts and arguments: trying to get past the all too common “communications issues”. ADR does not affect existing processes or review and appeal rights, and covers both VAT and direct taxes.
Types of cases suitable for ADR:
- Facts that are capable of further clarification;
- Disputes that might benefit from obtaining more suitable evidence;
- Factual and/or technical matters in which there is legitimate scope for any party to obtain a better understanding of the other’s arguments;
- Issues which are capable of further mediation and settlement by agreement within the framework of the Litigation and Settlements Strategy (LSS).
Types of cases unsuited to ADR:
- Cases which cannot be legitimately settled within the parameters of the LSS other than by litigation;
- Issues which require clarification in the wider public interest. These might include matters of industry-wide application;
- Issues linked to or involving co-ordinated appeals issues (“Stood behind” cases) e.g. ‘Compound Interest’ type disputes;
- Cases that could only be resolved by an HMRC departure from its established technical or policy view.
What does this mean for me?
Long-running tax enquiry cases have often developed a life of their own – completely beyond the underlying issues. In our experience bringing a fresh pair of eyes to look at the issues is nearly always beneficial. Therefore, if you have a long-running tax enquiry or tax investigation which has got bogged down, then the ADR may well be useful to you. However, there are two key things to bear in mind.
Firstly the ADR facilitators are still members of staff of HMRC. This is also a feature of the so-called independent complaints body the Revenue Adjudicator. Many professional commentators have stated that HMRC staff there seem too immersed in the culture of the organisation to ever truly adopt an independent and objective perspective.
Secondly, the ADR facilitator can only help both parties focus on the key facts and issues: as they have already been established. It still requires a skilled tax adviser, advocate and negotiator to uncover the key facts and issues and to present them in the most positive light. Simply taking your old correspondence to the facilitator may help break a deadlock where the problem is simply a personality clash. However, it is unlikely to resolve matters in your favour if you have not sufficiently developed your case at that point. In that instance you may need to consider introducing a specialist tax enquiry expert to assist with your negotiations with HMRC. That can include representing you in the Alternative Dispute Resolution process.
How can Lynam Tax dispute experts help me?
Lynam Tax experts have vast experience of resolving long-running and complex tax enquiries and compliance checks. If you are suffering from a prolonged tax investigation then call us today for an initial free and wholly confidential chat.
Call Paul on: 0845 643 9997