Tax and Alternative Dispute Resolution (ADR)
There are all sorts of reasons why a dispute arises between a taxpayer and HMRC. Most commonly disputes arise because the facts are misunderstood or evidence is incomplete. There may be disagreement as to the correct application of legislation or perhaps entrenched positions on both sides which lead to mistrust and stalemate.
You should always consider Alternative Dispute Resolution (ADR), a formal mediation process for tax, as a potential mechanism to accelerate resolution. ADR can be considered at any point provided that the dispute in question is sufficiently mature i.e. the facts, to the extent they are available, have been fully communicated to HMRC. In our experience ADR is invariably both a cost effective and efficient route to dispute resolution.
BDO and Alternative Dispute Resolution
BDO’s Tax Dispute Resolution team includes accredited mediators who can support clients and their professional advisors to determine whether ADR is a viable option. Where ADR is a realistic option, our accredited mediators will help manage the process, providing support from initial application until matters are concluded with HMRC. We can also provide one of the joint Mediators.
ADR can add value to cases that have been on-going for at least 18 months. Whilst ADR doesn’t guarantee resolution (although last year 80% of all cases accepted into ADR were successfully resolved), it certainly can turbo charge the process. The latest stats from HMRC demonstrate that about 85% of all ADR cases are resolved within a 120-day timeframe. For most cases that have already been open in excess of 500 days, this is a significant benefit.
Read our blog on the effectiveness of ADR.
In cases where formal ADR is ruled out for whatever reason, there is an alternative less formal route which should be considered. BDO can organise facilitated conversations with HMRC to help move disputes towards resolution. Again our accredited mediators with their practical knowledge of the Litigation and Settlement Strategy (LSS) can support you through the process.