Alternative dispute resolution process

By Tolley in partnership with Philip Rutherford

The following Personal Tax guidance note by Tolley in partnership with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Alternative dispute resolution process
  • How cases are selected for ADR
  • When should ADR be considered?
  • What is agreed when the parties join up?
  • How does the ADR process work?
  • Outcome of ADR

Historically, HMRC disputes tended to be resolved either by protracted correspondence and negotiation or in the Tribunal. Enquiries were often time consuming and costly affairs with neither party achieving a satisfactory outcome. HMRC began a pilot alternative dispute resolution (ADR) programme in 2011 with the aim of settling disputes in a more time efficient and cost efficient way, without the need for formal litigation.

Following the success of the pilot schemes, HMRC stated  that alternative dispute resolution (ADR) is ‘business as usual’ for small and medium enterprises and individuals from 2013/14.

In tax disputes with HMRC, ADR takes the form of mediation, where an independent mediator acts as a facilitator in order to try to resolve the dispute without binding the parties in advance of any outcome. The mediator will give directions for how the parties are to engage in the process. If ADR fails the parties can still decide to adopt the litigation route.

For more information on the background to ADR and the need for the agreement to be in line with the HMRC litigation and settlement strategy, see the HMRC policy on alternative dispute resolution guidance note.

This guidance note considers the ADR process in more detail.

How cases are selected for ADR

The following characteristics are outlined by HMRC as situations it considers suitable for ADR process:

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