Alternative Dispute Resolution

Alternative dispute resolution (ADR) aims to resolve tax disputes before reaching the tribunal stage. It involves an independent review of the case by an HMRC facilitator who will mediate and propose a settlement between you and HMRC. If both parties accept it can provide a quicker, cheaper resolution.

Most tax disagreements including income tax, capital gains tax, corporation tax, VAT, inheritance tax and employment taxes can potentially go through ADR, subject to HMRC agreeing it’s suitable. The exception is tax fraud cases.

ADR can provide faster resolution, typically within 3 months and without the stresses of a tribunal. It’s also a cost-effective option as you avoid excessive legal costs associated with court appeals. And it allows disputes to be settled confidentially out of court.

Yes, you can request ADR yourself or respond positively if HMRC suggests it. Write to HMRC formally seeking mediation. If agreed, an independent facilitator will be appointed to discuss the process. Both parties must consent for ADR to go ahead.

No, if either you or HMRC do not accept the settlement terms proposed by the independent facilitator, you still retain the option to progress the tax dispute to tribunal instead. ADR is voluntary.

There’s less certainty of outcome compared to a legally binding tribunal decision. The mediator’s proposal is non-binding. Settlements often involve compromise so you may not get the ideal resolution sought. Legal input can still be helpful during ADR.

Your accountant may have included some normal tax provisions. If not you may be able to make adjustments in your current financial year. If you are loosing any tax reliefs, you may need to amend accounts and resubmit to HMRC and companies house.