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HMRC have extended the trial of their alternative dispute resolution (ADR) facility, in the hope of settling a greater number of conflicts between the department and taxpayer businesses during compliance checks.
The system is open to small and medium-sized enterprises (SMEs) prior to an assessment or appealable decision being made by the taxman. A facilitator – a Revenue employee who has not been involved in the dispute - works with both parties in an effort to broker an agreement.
The process was first trialled nationwide between February and September last year on a small scale, based on selected cases. Around 60% were laid to rest or partially resolved, showing ADR to be effective, according to HMRC.
The latest stage of the pilot will take place initially in northwest England and north Wales, and other areas will be considered later. Cases will be accepted before an appeal has been made. Disagreements over VAT and direct taxes are covered, and entering into the process will not affect taxpayers’ existing review and appeal rights.
‘ADR has the potential to be a valuable Gordian knot-cutter in investigations and technical disputes that have run into the sand,’ claimed the Chartered Institute of Taxation’s Andrew Gotch, chairman of the body’s chairman of the owner-managed business sub-committee.
‘I would encourage all small businesses… [that] can take advantage of the facility to consider using it in situations where there are intractable disagreements with HMRC,’ he added.
‘This is an entirely voluntary process, from which neither side can possibly emerge worse off. In fact, evidence from the earlier phase of the pilot suggests participants usually emerge far better off either in terms of getting a solution or better understanding the other’s position.’
