Alternate Dispute Resolution

Details

Alternative dispute resolution (ADR) provides the voluntary alternative to accept the practice of using the courts to settle any civil disputes through adjudication, arbitration, conciliation, and mediation. Of which the best know forms of ADR are arbitration and mediation, though adjudication is becoming established as the most valued method in settling any civil dispute quickly and cost-effectively.
HMRC published the Litigation and Settlement Strategy in the year 2012, which is the internal guidance on how to handle the tax disputes. According to the Litigation and Settlement Strategy, it states that if an inspector considers having a 50% or greater chance of winning a case at a tax tribunal, that they should look to litigate.
This strategy led to the huge backlog of cases to be heard at tax tribunal, and hence the Alternative Dispute Resolution or ADR was brought to complement the strategy. ADR has been created to resolve disputes before the case being heard at the independent tribunal hearing.
The primary aim of the Alternative Dispute Resolution is to resolve the disputes between HMRC and taxpayers. The taxpayer could be an individual or a business.

Alternative Dispute Resolution Process

The Alternative Dispute Resolution process involves a mediator who works between the taxpayer and HMRC to mediate discussions. The mediator will be a trained independent officer. The aim is to reach an agreement on a negotiated settlement amount. ADR helps to resolve the case effectively when the basic facts are already mentioned in the dispute or when the taxpayer feels the HMRC investigation is inaccurate or irrelevant. Alternative Dispute Resolution Process helps HMRC and the taxpayer to reach an agreement. But even if the settlement is not successfully reached, the process may help to clarify the position of each party.
Additionally, though the Alternative Dispute Resolution process does not result in a settlement, the effective co-operation of the taxpayer with the dispute process will help the taxpayer in proving to HMRC that he is committed to resolving the issue.

Entering into the Alternative Dispute Resolution Process will not affect the existing review and appeal rights of the taxpayer.
If the Alternative Dispute Resolution Process does not resolve, the next step would be to take the case to the tribunal. The advantage of the Alternative Dispute Resolution Process is that the taxpayer and HMRC have more control over the process to oppose the court action. It helps with faster outcomes, fewer formalities to be taken care of, the confidentiality of the information, and better control over the costs.

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