Resolving Tax Disputes

Tax disputes between HMRC and business owners can be arduous, stressful and time-consuming. Whilst some disputes are resolved within a reasonable time, with both sides satisfied with the outcome, this isn’t always the case. Discussions can break down, and it can feel like both parties are merely going in circles. When this happens, there are a number of options available in order to move things along.

Traditionally, disputes with HMRC tend to be resolved through mutual agreement, or in extreme cases, through litigation with a tribunal or higher court. However, it’s the middle ground, when both parties reach a stalemate, that problems can arise.

HMRC has recognised this issue and has been introducing new strategies in order to provide a solution. The main way in which HMRC has attempted to tackle this problem is through the introduction of Alternative Dispute Resolution or ADR.


Whether you’re an individual, organisation or an agent representing a client trying to resolve a personal or business tax enquiry, you can apply for ADR. The process involves the appointment of a third-party to offer either arbitration or mediation. The third party is usually an independent and impartial employee of HMRC with training in mediation.

There are two aspects of ADR, arbitration which helps to determine the dispute and mediation, which aims to facilitate a resolution. Although both techniques can be useful, HMRC favour mediation as they believe arbitration is basically another aspect of litigation and better handled by the courts. The results seem to back this up, as mediation has been quite successful since it was first implemented in 2011.

Every case is different and will have to be judged on its merits. Therefore, there are different types of mediation, with options to suit specific circumstances.

  • Informal mediation involves an attempt to break down the dispute with open communication and an exchange of information. This is an impartial approach without any opinions given on the case itself.
  • Formal mediation is a similar approach but involves bringing both sides together. This usually involves a day of structured mediation. Again, no opinions are given on the case itself and who is at fault.
  • Expert opinion is different as it involves a panel of independent experts, who will give an educated opinion on the case. This approach can be quite influential as it gives both parties an idea of how things would fair in front of a tribunal.

Is it right for me?

ADR offers much freedom in that it can be used at virtually every point of the enquiry, including both before and after HMRC has issued a decision. Furthermore, ADR is non-binding in nature, meaning you can enjoy the benefits that it has to offer, but you aren’t locked into any decisions. Therefore, there are basically no drawbacks to utilising this service and HMRC seem to recognise this as they are continually recommending mediation as a viable solution.

Whilst there are many instances in which you can utilise ADR, it’s worth noting that it’s not always available. For example, if you have a complaint about HMRC giving you misleading advice or you have a dispute over tax credits. These are just some examples where ADR isn’t permissible, but there are many more- all of this information can be found on the HMRC website.

If you would like any specific advice on whether ADR is right for you and your business, don’t hesitate to visit us at the Salhan Accountants website for expert, impartial advice on all aspects of HMRC and self-employment.


Whether you’re a sole trader, business owner or an agent representing an individual, you can apply for ADR using the online form on the HMRC website. When applying, you will need to agree to specific principles, which include the sharing of relevant information and agreeing to availability for meetings.

After submitting your application form, HMRC will contact you within 30 days to let you know whether you have been accepted or rejected. Applicants can rest assured that their case will be taken seriously and any rejection that is given will have been decided by a panel of independent tax experts.

It’s also worth noting that you can be removed from the ADR process at any time if you break the terms agreed in the application process.

If are undergoing an investigation from HMRC and you are looking for advice, we at Taxation Investigation can help. We offer a variety of expert services, ranging from forensic accounting to litigation support.