Alternative Dispute Resolution
Welcome to the alternative dispute resolution (ADR) page. You will find this useful if you are currently experiencing an enquiry by HM Revenue & Customs (HMRC) and have, thus far, been unable to bring this to an end.
What is alternative dispute resolution?
It is a system that can be used by individual taxpayers, small and medium businesses 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 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 till 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 sides of the dispute, the taxpayer and HMRC, and try to get those two parties 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 may 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 that acts for you.
When can I ask for my case to be referred for alternative dispute resolution?
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.
What cases are not suitable for alternative dispute resolution?
Cases involving any of the following:
- fixed penalties on the grounds of reasonable excuse
- tax credits
- Pay As You Earn (PAYE) coding
- claims for tax not to be collected under Extra Statutory Concession (ESC) A19
- cases being dealt with by HMRC's Criminal Investigators
What if I still do not agree with HMRC after using alternative dispute resolution?
You still have the same rights of appeal that you always had.
How do I refer my case for alternative dispute resolution?
If you think that alternative dispute resolution is appropriate, ask HMRC to refer your case.
You can complete an online application form.
Where can I find out more?
You can obtain more details and check whether your case is suitable for alternative dispute resolution by reading HMRC’s leaflet CC/FS21.