Alternative Dispute Resolution
Welcome to the Alternative Dispute Resolution page. You will find this useful if you are currently experiencing an enquiry by HMRC and have, thus far, been unable to bring it to an end.
It is a system that can be used by small and medium-sized businesses, as well as individual taxpayers, to try and provide a quick and fair way to end disputes arising from compliance checks or enquiries. It can work alongside the appeal and review processes.
The purpose of alternative dispute resolution (ADR) is to help resolve disputes or to get agreement on which issues need to be taken for a legal ruling.
If you decide to request ADR at the start of your dispute, you should also appeal or ask for a statutory review, to keep your legal rights. You can request ADR after you have already submitted an appeal or when a review is in progress, as long as HMRC have not yet made their decision.
ADR is a mediation process. It involves a specially trained mediator or facilitator working with both you and HMRC to explore ways of resolving the dispute. The facilitator is appointed from within HMRC, and is someone who, up until now, has had no input to your enquiry or dispute. The responsibility for settling the dispute stays with you and the HMRC officer handling your case. The facilitator will not take over responsibility for the enquiry or dispute, but will speak to both you and HMRC, and try to get you to come to an agreement.
What can I expect from Alternative Dispute Resolution?
You can expect that the facilitator will review the case and listen to both sides. The facilitator will then be prepared to allow further discussion of facts and to listen to further arguments as to why a different interpretation might be placed on certain facts.
Can I use an agent to act on my behalf in Alternative Dispute Resolution?
Yes, you can. But you will have to pay your agent.
Will I end up paying less tax by using Alternative Dispute Resolution?
Not necessarily. The facilitator’s job is to act impartially but to obtain a fair result. The system does aim to finalise matters quickly, though.
Will it be held against me if I refer the case for Alternative Dispute resolution?
No, this is a service designed to help bring taxation disputes to an end. You must be prepared to listen to what the facilitator tells you and to work towards a conclusion.
How much does Alternative Dispute Resolution cost me?
This is a free service by HMRC, but you may have to pay any agent who acts for you.
You can do this at any time, but the mechanism can only work if all relevant facts are known to HMRC and there is then an item in dispute on which it is proving difficult to reach an agreement.
If you try to refer a case before all the facts have been provided to HMRC, you are likely to be told that no action can be taken until those facts have been provided.
Equally, if HMRC have raised assessments and an appeal has been made to a Tribunal, it may be too late to refer the case for alternative dispute resolution.
A full list of the types of dispute that do not qualify for alternative dispute resolution can be found on GOV.UK.
Some common ones relating to low-income taxpayers are disputes involving:
payments, including HMRC chasing you for a tax debt
fixed penalties for late filing of a tax return or late payment of tax, which you might appeal for example on the grounds of reasonable excuse
claims for tax not to be collected under Extra Statutory Concession (ESC) A19
You still have the same rights of appeal that you always had.
You complete an online application form.