The secret to resolving disputes with HMRC

    We are all aware of the huge pressures HMRC’s Compliance Officers are under to deliver additional tax yield. This leads to cases not being handled correctly and liabilities being pursued which may not be due. As a result contentious disputes are becoming ever more common and difficult to resolve. There are various options available to us but just how effective are they? Steve Price and James Cordiner, Senior Tax Consultants at Abbey Tax, share their expert opinion.

    Unfortunately, the days of being able to resolve disputes by reasonable discussion with the case officer or manager are few and far between. Furthermore, HMRC’s complaints procedure appears to be ineffective. This has left advisers with only one alternative, to turn to formal procedures including requests for an internal review, applications for a closure notice or appeals to the tribunal.

    All of these options are part of HMRC’s litigation process and all have their own individual merits. However, they all have their drawbacks as well.

    Internal reviews almost always seem to find in favour of the case worker and applications for a closure notice invariably end up before the tax tribunal hearing, where they are robustly defended. In most cases the litigation costs are prohibitive and it also takes a great deal of time to resolve matters.

    There is however one other option available which advisers may not have considered or used and that is Alternative Dispute Resolution or ADR.

    ADR was originally introduced to relieve some of the pressures on the tax tribunal. It has all the benefits of arbitration without compromising the normal rights of appeal and can be used at any time an impasse is reached. It has quickly become the most effective and cost efficient method of resolving disputes.

    The scope of ADR extends to all heads of tax including income tax, corporation tax and VAT and, apart from some specific exclusions, all types of case are considered with over 75% accepted.

    The process is controlled by a trained facilitator and provides both parties with the opportunity to meet and have potentially difficult conversations in a controlled environment with the aim of reaching agreement. All discussions are confidential and ‘without prejudice’, allowing the contentious point(s) to be openly discussed.

    Thorough preparation, professionalism and a firm but conciliatory approach are all key factors to success but the adviser’s performance on the day of the meeting is vital.

    The ADR process boasts impressive results, currently settling around 80% of all cases, 90% of which are settled on the day of the meeting. Anecdotal evidence suggests that most are settled in the taxpayer’s favour.

    ADR has many benefits:

    • more collaborative process
    • far less resource intensive
    • free to use and does not affect the statutory rights of appeal
    • ensures that the individual parties remain in control of the decision making

    In short there is everything to gain and very little to lose so why wouldn’t advisers use it?

    Abbey Tax has been involved in the development of the ADR process since its inception in 2012 and has strong professional links with the ADR team. We have a proven track record of successfully representing clients within this process and have achieved spectacular results. We are therefore well placed to help guide you and your clients through the process to whatever extent suits your needs.

    We are running ADR workshops on Tuesday 10 October in central Birmingham with two 2½ hour sessions available at 10am and 2pm where you can learn more about ADR and how to successfully navigate the process. For more information please contact Steve Price or James Cordiner on 0345 223 2727.