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Alternative Dispute Resolution

Updated on 6 April 2023

Tax basics

You may find Alternative Dispute Resolution (ADR) useful if you are currently experiencing an enquiry by HM Revenue & Customs (HMRC) and have, thus far, been unable to bring it to an end.

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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 in respect of any appealable matter which has not yet been decided by a tribunal, and at any point other than during an internal (statutory) review.

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. This may be online or by telephone. 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 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?

GOV.UK explains when you can apply for alternative dispute resolution.

What cases are not suitable 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:

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?

There is an overview of alternative dispute resolution on GOV.UK, and you can find out more by reading HMRC’s leaflet CC/FS21.

HMRC have also published Alternative Dispute Resolution Guidance. This is an internal manual for HMRC staff, but you may find it useful if you are considering alternative dispute resolution.

Tax guides

Introduction to the tax system How do I work out my tax? What income is taxable? What tax allowances am I entitled to? What tax rates apply to me? How is my tax collected? What if I cannot pay my tax bill? Do I need to complete a tax return? Self Assessment: understanding the basics What is Simple Assessment? How do I claim tax back? How do I claim back tax I have overpaid through PAYE on wages or pensions? How do I claim back tax if I complete a tax return? How do I claim back tax if I am taxed under the Construction Industry Scheme (CIS)? How do I claim back tax on savings income? How do I claim a marriage allowance refund? How do I claim back tax on a payment protection insurance (PPI) pay-out? Should I use a tax refund company? What is National Insurance? How do I get a National Insurance number? What are Specified Adult Childcare credits? What is Scottish income tax? What is devolution? Do I have to pay Scottish income tax? How does Scottish income tax work? What is Welsh income tax? Do I have to pay Welsh income tax? Do I have to join a pension scheme? Tax relief on your pension contributions HMRC digital services Enquiries, penalties, appeals, complaints and debt Enquiries How to survive an enquiry by HMRC Tax penalties Tax appeals Alternative Dispute Resolution How do I complain to HMRC? What if I cannot pay my tax bill? What if I have a tax credits overpayment?
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