Apart from Internal Review and Appeals into the Tax Tribunal, consideration must always be given to going into Alternative Dispute Resolution (“ADR”).
HMRC makes it clear that ADR isn’t right for disputes about:
- Requests for time to pay or similar issues
- Fixed penalties on the grounds of reasonable excuse
- Tax credits
- PAYE coding
- HMRC delays in using information
- Cases that HMRC’s criminal investigators are dealing with
- Default surcharges
Over 80% of applicants are accepted into ADR and our experience is that most cases will result in either a full settlement or partial settlement for the taxpayer. That said, our level of preparation for the ADR process is exemplary – we go in prepared and, frankly, we are always better prepared than HMRC. Even on those cases where we need to proceed to Tribunal, we clear the ground so that the Tribunal hearing concentrates on the key issues – this saves time and money at the appeal.
Our experience is that ADR is especially good for cases where:
- HMRC has failed to grasp the full facts
- HMRC has not understood the relevant legislation and case law
- Or both
HMRC will often bring specialists to the meetings who are more likely to understand the facts of the case or the relevant law. We are always properly prepared, and so welcome these experts as we know it increases our chances of obtaining a settlement.
ADR involves a commitment from both sides to seek a settlement. Matters are dealt with openly and frankly within the ADR process and nothing is supposed to be taken away for use elsewhere without agreement between the parties. Most ADR meetings use an HMRC appointed mediator – usually an officer trained in the ADR process. Some meetings use a third party professional mediator. It starts with both parties stating what they would like to achieve. The key issues are identified and then the parties and the mediator work together to see where solutions can be reached. The meeting ends with agreement on actions – and agreeing to differ, thus clearing ground for an appeal.
ADR is about the closest we get in tax to putting the parties in the same room and not letting them out until they come to an agreement.