Alternative dispute resolution

Introduction

Alternative dispute resolution (also known as ADR) 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 HMRC compliance checks or enquiries. It can work alongside the appeal and review processes.

The purpose of alternative dispute resolution 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 alternative dispute resolution at the start of your dispute, you should also appeal or ask for a statutory review, to keep your legal rights. You can request alternative dispute resolution in respect of most appealable tax matters which have not yet been decided by a tribunal, and at any point other than during an internal (statutory) review.

Alternative dispute resolution 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 to expect from alternative dispute resolution

You can expect that the mediator will review the case and listen to both sides. The mediator 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.

The mediator’s job is to act impartially but to obtain a fair result. The system does aim to finalise matters quickly, though.

It will not be held against you if you refer your case for alternative dispute resolution. Alternative dispute resolution is a service designed to help bring taxation disputes to an end. You must be prepared to listen to what the mediator tells you and to work towards a conclusion.

Alternative dispute resolution is a free service by HMRC, but you may have to pay any agent that acts for you.

When you can use alternative dispute resolution

GOV.UK explains what sort of disputes can be dealt with under the alternative dispute resolution process. Examples include:

• where there is a breakdown of communication between you and HMRC
• where there is a dispute about the facts of the case
• there is a misunderstanding, or you believe HMRC have made incorrect assumptions

When you cannot use alternative dispute resolution

A full list of the types of dispute that do not qualify for alternative dispute resolution can be also 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
• Pay as you earn (PAYE) coding problems
• claims for tax not to be collected under Extra Statutory Concession (ESC) A19

If you still do not agree after alternative dispute resolution

If you use the alternative dispute resolution process, but are not satisfied with the outcome, you still have the same rights of appeal that you always had.

How to refer your 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.

More information

There is an overview of the alternative dispute resolution process 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 using alternative dispute resolution.