HMRC Launches Alternative Disputes Resolution Tax Pilot in North West and North Wales

HMRC has launched a new dispute resolution pilot in the North West and North Wales for small and medium sized enterprises (SMEs). Under this scheme, independent HMRC facilitators, who have not been involved in the case up to that point, are used to resolve disputes that may have arisen during HMRC's compliance checks. HMRC Logo

The driving force behind this initiative is to avoid tribunal hearings and reduce the associated costs for both parties.  

This initiative follows a similar pilot in 2011 that was aimed at cases heading towards the tax tribunal. HMRC said that 60% of these disputes were either fully or partially resolved, with the "overwhelming majority" fully resolved.

HMRC's assistant director, local compliance, Jim Stevenson, said: "ADR will help SMEs resolve disputes without having to go to a tribunal - saving them both time and money. It is a good opportunity for HMRC to work together with our customers to potentially resolve disputes much earlier than at present.

"The facilitators are HMRC members of staff who have been trained in ADR techniques and have not been involved in the dispute.

"We have found that often there are communication problems. So the HMRC facilitator will help all parties reach a shared and full understanding of the disputed facts and arguments. They will also ensure there is good communication, and help explain what each side is trying to say to the other. The aim is to resolve the dispute or, if not, as many issues as possible."


Tim Adcock, Mitchell Charlesworth's Specialist Tax Partner said that, in order for the scheme to be successful, there must be a guarantee of independence from the dispute mediator, which is not immediately obvious.

"In order to encourage SMEs to use the ADR procedure, they must have assurances that the HMRC facilitators are independent and that they will get an impartial ruling from the dispute resolution facilitator"

It could be argued by SMEs that the Treasury should not play the role of mediator in the ADR procedure as the original dispute was with their own HMRC decision. Rather, an independent adjudicator could be used with an objective view of the facts - perhaps of the SMEs own choosing?"

"Nevertheless, we would urge smaller businesses in North Wales and the North West to take advantage of this pilot scheme as evidence suggests that participants usually emerge better off, whether this is a final solution or a greater understanding of each side's position which should reduce your costs, time and stress."

More background on the ADR pilot can be found on HMRC's website here.

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