Individuals and SMEs throughout the country can take advantage of a new way of resolving disputes with HMRC.

The ADR pilot was launched in January 2012 for SMEs in select part of the UK and uses what is referred to as ‘independent’ HMRC facilitators to resolve disputes between HMRC and taxpayers during a compliance check, but before a decision or assessment has been made. ADR aims to find a fair and quick outcome for both parties, targeted at reducing costs on both sides and avoiding a tribunal.

The facilitators involved are HMRC members of staff who have been trained in ADR techniques and have not been previously involved in the dispute. Readers should note that ADR does not affect existing processes or review and appeal rights, and covers both VAT and direct taxes.

Cases potentially suitable may involve any of the following features:

• Facts that are capable of further clarification;
• Disputes that might benefit from obtaining more suitable evidence;
• Factual and/or technical matters in which there is legitimate scope for any party to obtain a better understanding of the other's arguments; or
• Issues which are capable of further mediation and settlement by agreement within the framework of the Litigation and Settlements Strategy (LSS)

Non-suitable cases may involve any of the following features:

• Cases which cannot be legitimately settled within the parameters of the LSS other than by litigation;
• Issues which require clarification in the wider public interest which might include matters of industry-wide application;
• Issues linked to or involving coordinated appeals issues (“Stood behind” cases) e.g. ‘Compound Interest’ type disputes
• Cases that could only be resolved by an HMRC departure from its established technical or policy view

A nationwide ADR pilot is already available for large and complex businesses and customers of the Large Business Service. For more information and details of how to apply to use the ADR process, go to http://www.hmrc.gov.uk/adr/index.htm