Settling a tax dispute with ADR
HMRC explains how you can apply for Alternative Dispute Resolution (ADR) and when you can use it to resolve a tax disagreement with it
Anyone can apply for ADR to help resolve a dispute with HMRC, or to get more information about issues that need to be taken for a legal ruling.
• individuals trying to resolve personal tax issues.
• organisations trying to resolve business tax issues.
• agents representing personal or business tax clients.
How ADR works
An HMRC mediator who has been trained in mediation skills and techniques will work with you and the HMRC officer dealing with your case. They will help you both explore ways to resolve your dispute, including helping you:
• focus on the areas that need to be resolved.
• re-establish communications, if needed.
They will not take over responsibility for the dispute.
What ADR can be used for
ADR can be used before and after HMRC has issued a decision that can be appealed against, and at any stage of an enquiry, including:
• during a compliance check when you are unable to reach an agreement with HMRC, or where progress in the enquiry has stalled.
• at the end of a compliance check, when a decision has been made that you can appeal against.
ADR does not affect your right to appeal, or to ask for a statutory review.
Each application is considered on a case by case basis. ADR is not a statutory process and HMRC reserves the right to reject applications that we do not consider appropriate for ADR.
ADR can be used when:
• communications have broken down between you and HMRC.
• there are disputes about the facts.
• a dispute appears to be the result of a misunderstanding.
• you want to know why HMRC has not agreed evidence you have given them, and why they want to use other evidence.
• you’re not clear what information HMRC has used, and you think they may have made wrong assumptions.
• HMRC need to explain why they need more information from you.
You cannot use ADR for:
• complaints and disputes about HMRC delays in using information or giving you misleading advice – find out how to complain about HMRC.
• debt recovery or payment issues – find out what to do if you cannot pay your tax bill on time.
• disputes about tax credits – find out how to appeal or complain about tax credits.
• disputes over default surcharges.
• automatic late payment or late filing penalties.
• PAYE coding notices.
• Extra-Statutory Concessions.
• cases that HMRC’s criminal investigators are dealing with.
• pension liberation schemes.
• High Income Child Benefit Charges.
• disputes about the National Minimum Wage.
• accelerated payments and follower notices.
• cases the First Tier Tax Tribunal have categorised as ‘paper’ or ‘basic’.
Read the ADR – CC/FS21 factsheet if you need more information to decide if ADR is right for you.
You may still be able to disagree with a tax decision if you cannot use ADR.
When you can apply
You can apply for ADR at any stage of an enquiry. However, if you have already lodged an appeal at the First Tier Tax Tribunal and HMRC’s Statement of Case has been served (or is due within 10 days of you applying for ADR) your application will only be accepted in exceptional circumstances.
Direct tax disputes after HMRC has made a decision
You can apply for ADR when HMRC has made a decision about a direct tax issue you have appealed against and have taken one of the following actions:
• accepted the appeal, but have not offered you a statutory review.
• offered you a statutory review that you have accepted – you must wait for the review to end, appeal to the tribunal and have the appeal accepted before applying.
• offered you a statutory review that you have not accepted – you must appeal to the tribunal first, and have the appeal accepted before applying.
Indirect tax disputes after HMRC has made a decision
You can apply for ADR when HMRC has made a decision about an indirect tax issue and you have either:
• accepted our offer of a review – you must wait for the review to end, appeal to the tribunal and have the appeal accepted before applying.
• not accepted our offer of a review – you must appeal to the tribunal first, and have the appeal accepted before applying.
What you’ll need
You will need to provide us with some information about your dispute. It may be useful to have any correspondence that you have received from HMRC to hand when completing the application form.
You will also need to agree to some principles including sharing all information promptly and being available for meetings to resolve the dispute.
If you are an agent, you’ll also need to confirm that your client agrees to these principles.
How to apply
Use the online form to ask for ADR.
The ADR team will let you know within 30 days of receiving your application if ADR is right for resolving your dispute.
If you are accepted into the process, you must follow the principles you agree in the online form. If these terms are broken at any time, HMRC can remove your dispute from the ADR process.
If your ADR application is rejected
All ADR applications that are recommended for rejection must follow strict governance procedures. Any decision to reject an application must be agreed by a panel made up of independent tax professionals.
We’ll tell you if we decide your case is not suitable for ADR.
If your dispute cannot be resolved using ADR
If you’re unable to reach an agreement at the end of the ADR process your HMRC mediator will tell you what you can do next.
• This is an extract from advice published on HMRC’s website