Following a successful two-year pilot, HM Revenue & Customs (HMRC) has announced that it will roll out its alternative dispute resolution (ADR) scheme small and medium-sized businesses and individuals on a permanent basis.
The ADR scheme is specifically aimed at smaller cases where litigation may not be financially viable, for example, any case where between £2,000 and £80,000 of tax is at stake.
ADR enables disputes to be resolved by encouraging both sides to reach a settlement within a short timescale, usually between four and eight weeks. The pilot proved particularly successful, with more than 66 per cent of cases accepted into ADR being either fully or partially-resolved within an average of 61 days.
HMRC has set up a permanent ADR team to focus on this area, which should come as good news to SMEs or individuals who feel locked into ongoing disputes with HMRC, as it will offer an effective mechanism for the matter to be resolved. ADR will also require HMRC to involve appropriate technical specialists, prompting it to reconsider its position where previously it may have refused to move.
ADR is particularly useful in disputes where there is a lack of evidence, or where taxpayers feel that HMRC is not considering the full range of evidence available. It can also help where there is conflict over issues such as valuation, or where there has been a breakdown in communication with an HMRC inspector (who, incidentally, does not have the power to turn down an ADR application), as well as instances where there is agreement on a technical position but not on the methodology.
However, it is important to note that HMRC does not accept all ADR applications. This is why any application must explain clearly why ADR would be beneficial in your case – it cannot be used as a way out of a dispute without good reason.
At Salhan Accountants, our dedicated Taxation Investigation team can advise you on your options, based on your circumstances, and where a case for ADR is identified, assist you in putting forward a clear application emphasising the reason for it reaching deadlock and the value of ADR in resolving it.