New way of dealing with disputes with the taxman
A new way for small businesses to deal with disputes with the taxman is being rolled out nationwide after what is seen to be successful trials in some parts of the country.
The Alternative Dispute Resolution (ADR) uses independent HMRC facilitators to resolve disputes between HMRC and customers during a compliance check. It aims to find a fair and quick outcome for both parties, helping to reduce their costs and avoid a tribunal.
Small businesses and individuals who are in dispute with the tax man can request the involvement of a facilitator whose function is to help both parties understand each other and work towards an agreement.
However, the trial was not without its critics who felt that the independent facilitators were not truly independent as they came from within HMRC's own employees. Nevertheless, after a two-year trial period and consultation with professional bodies and the voluntary sector, most concerns have been addressed.
Richard Summersgill, HMRC Director of Local Compliance, said: "I am delighted to announce that Alternative Dispute Resolution for small businesses and individuals has entered mainstream HMRC business.
"We know that taxpayers like the speed and flexibility of Alternative Dispute Resolution, and evidence has shown that by using the simple service, many disputes can be significantly shortened and resolved without recourse to Tribunal."
ADR is available to small business and individual taxpayers where a tax issue is in dispute, whether or not an appealable tax decision or assessment has been made by HMRC. It covers both VAT and direct taxes disputes, and entering into the ADR process will not affect the taxpayer's existing review and appeal rights.
Log-jammed
Professional tax body, the Association of Taxation Technicians (ATT) welcomed the extension of the scheme.
ATT President, Yvette Nunn, said: "Tax dispute resolution has been in need of reform for far too long and this is, I believe, the shape of things to come. In appropriate circumstances, ADR should provide SME businesses and individuals and their advisers with a cost-efficient and effective way of settling disagreements.
"The results of the ADR pilot were very encouraging and we believe that its implementation will play a significant part in helping to resolve log-jammed disputes where neither party is managing to persuade the other of their position. HMRC engaged very positively with professional bodies and the voluntary sector and undertook extensive trials. The end product is one that we are very pleased with. We will be following developments very closely to ensure that ADR lives up to expectations.
"During the pilot scheme, ADR has already assisted with the resolution of a significant number of direct and indirect tax disputes. It is good to see that many users have praised its efficiency and speed with two thirds of applications resulting in a full or partial resolution."