Alternative Dispute Resolution for tax disputes

HMRC’s Alternative Dispute Resolution (ADR) process could provide an opportunity to resolve your dispute with HMRC.

Simmons & Simmons has extensive experience in helping our clients successfully navigate the ADR process, either as an alternative to, or alongside, the litigation process.

What is HMRC’s Alternative Dispute Resolution process?

HMRC’s Alternative Dispute Resolution process facilitates discussions between HMRC and the taxpayer with the aim of resolving their dispute outside of litigation. A specially trained HMRC mediator will seek to help taxpayers and HMRC alike clarify the issues between them and resolve their disputes more efficiently.

What are the advantages of using ADR for tax disputes?

• Collaborative: resolving disputes through ADR can help preserve a good working-relationship with HMRC
• Confidential: ADR procedures are conducted on a without prejudice basis, enabling parties to explore the strength of their positions, and take place in private, avoiding the publicity and reputational risk of a public court case. There are specific carve-outs for the provision of material information about a taxpayer’s position, and these need to be addressed carefully.
• Flexible: ADR procedures can be tailored to reflect the nature and parties of the dispute at hand, and give the parties greater control of the process
• Understanding: facilitated discussions can help the parties provide each other with more clarity on their respective positions than written correspondence allows
• Savings: both HMRC and the taxpayer may save both time and costs in resolving the dispute through collaborative discussion

How we work with clients

Our experienced tax mediators advise clients, in particular taxpayers within HMRC Large Business, throughout the ADR lifecycle: from application, to preparation, to mediation and beyond.

We represent taxpayers in HMRC’s Alternative Dispute Resolution process across the full range of corporate tax, VAT, indirect taxes and transfer pricing disputes.

Our team can help you assess whether your tax dispute is suitable for HMRC’s Alternative Dispute Resolution process, and the form the ADR should take, bearing in mind the nature of the disagreement, the amounts at stake, and your key priorities in resolving the dispute. We can also advise where ADR techniques may help resolve your dispute as part of an informal process.

To discuss whether ADR could help resolve your tax dispute, please contact Heather Rowlands for a confidential initial discussion.

Case Study

We represented a financial services group in a longstanding VAT partial exemption method dispute with HMRC. We advised the client that participating in HMRC’s Alternative Dispute Resolution process would allow them to develop HMRC’s understanding of their structure and activities and to explore the range of available solutions more effectively than the Tax Tribunal process.

The ability to tailor the ADR process allowed both our client and HMRC to pose and respond to questions, and to clearly articulate their positions and proposed solutions.

Harnessing the data capabilities of our Wavelength team, we presented large volumes of data analysing the transactions carried out by one of the client’s group companies to model alternative VAT partial exemption methods so the parties could better understand the implications of the settlements proposed.

The negotiated settlement addressed both retrospective and prospective VAT accounting periods, including agreeing sources of accounting data to be used in future computations.

Listen to our ADR and transfer pricing controversy webinar: