Throughout a compliance check HMRC will provide accurate, consistent and clear information to the taxpayer, including details of any assessments raised and explanations for any decisions HMRC make during the check. Should a taxpayer have any questions about the compliance check or an assessment, they should write to HMRC who will seek to clarify anything that is unclear. However, HMRC’s approach also relies on a shared understanding of the full facts so that they can understand the full nature of the tax risk and deal with it appropriately.
It is generally only when an impasse is reached between HMRC and the taxpayer that Alternative Dispute Resolution (ADR) is considered. In some cases the full facts will have been established and the mediation will focus on the consequent tax analysis. But in some, the value of ADR will be to seek through mediation, a shared understanding of the facts and help the case progress on that basis.
Alternative Dispute Resolution (ADR) is a voluntary, informal process in which an impartial HMRC mediator actively assists parties to work towards agreement of a tax dispute. ADR is one facet of HMRC’s overall approach to dispute resolution, which is wherever possible to reach agreement with taxpayers through collaboration. The following is specific information relating to the ADR function only and therefore only forms part of the dispute resolution landscape in HMRC. HMRC do not currently offer arbitration as a means to resolve disputes.
For the period 1 April 2015–31 March 2020 there have been 5,467 applications for ADR. Of these, 2,641 were suitable for mediation and accepted into the ADR process with an average resolution rate of 86.8% across all years.