Alternative dispute resolution scheme

HMRC’s alternative dispute resolution service seems to be one of its best-kept secrets

Following a successful opening trial in certain regions, in 2012 the Alternative Dispute Resolution (ADR) Scheme was extended nationwide. 

The service offers an arbitration-based means of attempting to resolve a tax dispute, as an alternative to taking a case to tribunal.

The essence of the scheme is to provide an 'independent HMRC facilitator' who offers a mediation-based approach to resolving a tax disputes which arise during the course of a compliance check, before an assessment or appealable decision is issued.  

Its aim is to reach a quick and fair conclusion and to avoid the need for either party to take the case to tax tribunal.

It is important to note that the scheme is different from, and reportedly more impartial than, HMRC's Internal Review process. Its success will depend partly on the amount of take-up by taxpayers and their agents; those involved in tax disputes should try and use the service, wherever possible.

Using the service does not subsequently affect the taxpayer's right of appeal and even if a favourable outcome cannot be reached during through ADR, it may provide a useful pointer as to which way a future tribunal case might go.

The scheme may be used for both VAT and direct tax disputes.

HMRC advises that cases potentially suitable for ADR may involve any of the following features:

  • Facts that are capable of further clarification;
  • Disputes that may benefit from obtaining more suitable evidence;
  • Fact and/or technical matters in which there is legitimate scope for any party to obtain a better understanding of the other’s arguments; 
  • Issues that are capable of further mediation and settlement by agreement within the framework of the Litigation and Settlements Strategy (LSS). 

For further information visit the 'Related links' section on this page.

Please email and let us know if you have used the service and how you found the process.