In 2012, HMRC published their Litigation and Settlement Strategy. This was/is its internal guidance on handling tax disputes and broadly states that, if an inspector considers they have a 50% or greater chance of winning a case at a tax tribunal, that they should look to litigate on that strength and not negotiate. Inevitably, this created a huge backlog of cases to be heard at tribunal so the HMRC Alternative Dispute Resolution process was brought in to complement it, with a view to resolving disputes differently prior to the case being heard at an independent tribunal hearing.
HMRC ADR aims to resolve disputes between HMRC and taxpayers, by introducing a 3rd party mediator. It is potentially available to any individual or business, regardless of whether or not an appealable decision or assessment has been raised by HMRC.
The HMRC ADR process involves a mediator working with the taxpayer and HMRC inspector to mediate and break down the discussions, with the aim of reaching an agreement on a negotiated settlement, by agreeing wherever possible and agreeing to disagree on some points as necessary. The mediator will usually be a specially trained, independent officer, but can also be an external professional.
The HMRC ADR route can be very effective, especially in cases where the basic facts are in dispute or where the taxpayer feels that HMRC are making inaccurate assumptions or causal links, something that would have to happen at a tribunal hearing too.
The HMRC Alternative Dispute Resolution process often helps both parties reach an agreement but, even if a successful settlement is not reached, the process can at least help clarify each party’s position on the facts. Furthermore, whilst any discussions are on a ‘without prejudice’ basis and so not permissible in any formal tribunal proceedings, co-operation with the process does demonstrate to HMRC that the taxpayer is committed to resolving the dispute/case.
Most importantly, entering into the HMRC ADR process will not affect the taxpayer’s Independent Review and Appeal rights. If HMRC ADR does not result in a negotiated settlement, the next step is usually to take the case to a tax tribunal.
Alternative Dispute Resolution
We believe it’s in a client’s best interest to discuss these types of matters with an ‘independent specialist’ even if one’s position is considered to be particularly strong. The right help at the right time ensures that HMRC are effectively managed and enquiries and disclosures are concluded expeditiously, and in particular that long delays and costs involved with taking a dispute to the tribunal are avoided.
Our team are experts at resolving contentious tax issues accurately and efficiently. We are highly adept at managing our clients’ interactions with HMRC to ensure all processes, like the HMRC Alternative Dispute Resolution, run smoothly and that our clients’ interests are best protected at all times.
Importantly, we deliver that all-important trusted ‘buffer’ between our client and HMRC during their in-depth and intrusive investigations and in all voluntary disclosures.
Get in touch to learn more about how Amit and the Tax Investigations and Disputes team have successfully guided clients through the WDF disclosure process, and COP9 or COP8 investigation processes.
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HMRC ADR
At Pure Tax our Tax Investigation & Disclosure specialists are industry recognised and have dealt with hundreds of contentious situations with HMRC over the years. We are adept at managing interactions with the tax authorities to ensure that the investigation and disclosure processes run smoothly and that your interests are best protected.
