• Virtual mediations can unlock disputes with HMRC

Virtual mediations can unlock disputes with HMRC

08 December 2020

From March 2020, lockdown and subsequent social distancing measures meant that “traditional” Alternative Dispute Resolution ("ADR") i.e. “face to face” mediation was not available. Replacing this, ADR has evolved rapidly to accommodate the necessary move to virtual platforms.

Over the past 6 months, HMRC has invested heavily to develop and support a virtual ADR service offering.

In particular, the ADR team focussed on:

  • Upskilling the pool of mediators
  • Enhancing their IT capabilities and processes
  • Rolling out an education program for HMRC staff
  • Updating HMRC guidance and manuals to reflect the new virtual ADR facility
  • Partnering with the Tribunal Services to better integrate ADR in the court process
  • Publicity drive / raising awareness through webinars and articles

Mediation has never been so accessible.…

HMRC statistics over the past 6 months indicate that virtual mediations are just as effective as traditional ADR in achieving resolution. Last year traditional mediation had a success rate of 89% (a combination of 59% Fully resolved, 15% Clarity, and 15% Partially resolved).  Virtual mediations have a similar success rate of 87%.

Advantages of virtual mediation:

  • Distance is no barrier.  One of the challenges of traditional ADR is bringing together geographically diverse teams for an entire day, this is eliminated in virtual mediations. 
  • Virtual mediations offer flexibility to “dip in and out” as necessary.  Under the previous ADR model key business people had to give up a whole day to attend the mediation. 
  • This also allows key HMRC technical advisors and policy to be far more accessible than they were under the traditional model.

All this can add up to significant administrative, logistical and cost efficiencies.

It is important to be aware however that the virtual platform brings its own challenges.  In particular it is recognised that:

  • Virtual mediations can be even more exhausting and draining than traditional mediations. 
  • Relationship and rapport building, a key component of ADR, may be tougher in the virtual environment. 
  • Exit agreements can be more difficult to co-ordinate virtually.

The soft skills the mediator brings to the table are therefore even more critical.  The past six months has shown that managing people and their energy levels is an essential skill for an effective mediator alongside their necessary IT proficiency to successfully navigate the virtual platform.

How can we help?

  • ADR expertise

At BDO we have supported clients through all stages of this new reality.  Back in March we hosted multiple parties for a telephone mediation spanning two days.  As HMRC’s protocols and processes evolved we managed cases through mediated email conversations all the way to full day virtual mediations. 

  • Identify opportunities

Often HMRC will sign-post the availability of ADR at particular key milestones such as when issuing a decision letter and/or raising an assessment. There are opportunities to utilise mediation even where this has not been offered by HMRC.   

  • Accelerating dispute resolution

Introducing ADR into the conversation will cost you nothing but can have significant benefits in accelerating resolution.  In practice this may even mean that mediation is not ultimately necessary because the momentum and change of focus enables the parties to settle before the day itself.

Whilst there are inevitable teething troubles after going virtual overnight, overall the benefits outweigh the costs and as a result ADR has never been so accessible.