It may not be the most widely known fact: Her Majesty’s Revenue and Customs have officials who are specially trained as mediators. Maybe you already knew this? If you didn’t and you advise businesses it could be information worth passing on. HMRC revealed in their evaluation in December 2012 that the Alternative Dispute Resolution service which has been piloted over 2 years, works. Two thirds of applications accepted into the trial resulted in the disputes being either fully (the vast majority) or partially resolved. Both parties experienced the benefit of greater understanding of the actual tax position with HMRC rectifying their position in almost a quarter of cases.
According to the evaluation the view of the ADR service is largely positive from the point of view of both parties with applicant feedback “unanimously” finding HMRC mediators even-handed and unbiased. The HMRC mediator is someone who is neutral. She or he has not been involved in the case before. The taxpayer and the HMRC official familiar with the case meet with the mediator. The parties have private as well as joint discussions and work towards reaching an agreement. There is no cost to use the ADR service and rights of appeal or statutory reviews can run alongside it and access to those routes remains unaffected if the ADR service is used.
As well as a more cost-effective option which avoids the expence of a full tribunal, a further advantage is that the ADR service can be accessed prior to HMRC’s decision. This offers an opportunity for individuals as well as businesses to be more constructively engaged at an earlier stage and participate in shaping what may be a more workable outcome. It is also possible in some circumstances for the two parties to jointly pay for an external mediator if all agree.
The new system is now being rolled out for the tax year 2013/14 and applications can be made online (or processed in a different way if internet is not possible). The role of the mediator has been re-named for some reason to ‘facilitator’. Provided the facilitators are appropriately trained there is every reason for the ADR service to build on its current strengths. Let’s hope there are enough facilitators to meet the demand.