Alternative Dispute Resolution
Help with your Tax Return guide
Alternative Dispute Resolution (ADR)
ADR is a way of resolving disputes between HMRC and taxpayers.
ADR is available to individual customers where a tax issue is in dispute, whether or not an appealable tax decision or assessment has been made by HMRC.
If HMRC has made an assessment of tax, or other appealable decision, you should appeal or ask for statutory review to protect your legal rights as well asking for ADR. You can also ask for ADR before HMRC have made a decision.
The process involves a facilitator working with the taxpayer and the HMRC case officer to try to broker an agreement between them. The facilitator will be an HMRC officer who has been specially trained and who has not been involved in the dispute before.
It covers both VAT and direct taxes disputes and is open to all customers nationwide. Entering into the ADR process will not affect the taxpayer’s existing review and appeal rights.
ADR is a quick and flexible process and you may want to see if it can help before HMRC make a formal decision about your case. It can help focus on areas of the dispute that you believe need clarification, and re-establish dialogue where it has broken down.
ADR has proven to be a quick and effective method of resolving disputes.
Where ADR may help
ADR may help where compliance checks have reached an impasse, and where one or both of the parties has reached an entrenched position. Where for example:
- Communications have broken down
- The facts are in dispute
- The dispute is a result of a misunderstanding
ADR may be useful if
- You and HMRC have different views on exactly what has happened – the facts
- Communication between you and HMRC has broken down
- You need to know why HMRC have not agreed evidence that you have provided and why they want to use other evidence
- You want HMRC to explain why they need more information from you – particularly where this information is for previous years and is difficult for you to obtain it (for example because it is all filed away in storage)
- You are not clear what information HMRC has used and feel they may have made wrong assumptions
Even where ADR does not succeed in settling the dispute, it can help to clarify the issues for the next stage – e.g. to a tribunal hearing.
- If you ask for your case to be considered by HMRC under ADR, the possible outcomes are:
- The explanations and information you provide enable HMRC to accept your position;
- The explanations and information HMRC provide mean that you accept HMRC is correct;
- Separate areas of dispute are identified and agreed, so that you can reach overall settlement
- You are not able to reach agreement. You are still able to appeal against HMRC’s decision or assessment to a Tribunal, and may be better prepared to do so
Some disputes are not suitable for ADR. It is not designed for disputes about HMRC’s interpretation of the law, or how the law applies to agreed facts. For example:
- ESC A19 claims / HMRC delays in using information
- Where there is no dispute, of formal appeal, but you are unhappy about your treatment by HMRC: you would need to use the Complaints route
- Tax Determinations made by HMRC where tax returns are outstanding – you need to file a return
- Tax Credits
- Time to pay requests
- Fixed penalties for late filing on the grounds of reasonable excuse
- PAYE coding
- Cases being dealt with by HMRC’s criminal investigators
- Default surcharges
More information can be found at:
If you are not sure whether ADR is suitable for your dispute or have any other questions about ADR you can email HMRC’s Dispute Resolution Unit at firstname.lastname@example.org
If you think your case can be considered for the ADR process, you will need to complete an online application form by following the link below:
Your application will then be considered and you will hear back from HMRC within 30 days. If you are unable to apply online, contact HMRC by telephone on 01452 397088 and they will be able to process your request.
HMRC have provided a Factsheet CC/FS21 which can be downloaded from: