Welcome for new way to deal with tax man disputes
Evaluation of HM Revenue and Customs' alternative scheme to resolve disputes with the use of a facilitator has shown encouraging first signs of success.
The Alternative Dispute Resolution is an HMRC initiative which allows small businesses and individuals who are in dispute with the tax man to request the involvement of an "HMRC facilitator" whose function is to help both parties understand each other and work towards an agreement.
There was some initial criticism of the pilot amid concerns that an HMRC facilitator could not be truly independent.
However, HMRC's evaluation of the pilot scheme shows that facilitators have handled a wide variety of direct and indirect tax disputes with two thirds of applications being either fully or partially resolved. It added that feedback unanimously showed HMRC facilitators to be impartial and even-handed, and demonstrated an appreciation for the personal interaction that ADR gave them.
Because ADR is non-statutory, a taxpayer cannot insist on it but it is likely to play an increasingly important role in the resolution of tax disputes.
Welcomed
The results have been 'warmly welcomed' by tax group, The Association of Taxation Technicians (ATT). Its President, Yvette Nunn, said: "This evaluation of the ADR pilot is very positive. ADR can play a really helpful part in resolving log-jammed disputes where neither party is managing to persuade the other of their position.
" It is very sensible of HMRC to have avoided accepting too many cases into the ADR pilot. There has been a steep learning curve for everyone involved.
"We hope that when ADR becomes more widely available that it will help to resolve an increasing number of disputes thereby reducing the need for litigation and easing pressure on the tribunal system.
"During the pilot scheme, ADR has already assisted 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. The data in this evaluation will help HMRC make informed decisions as to how and when ADR is rolled out and what resources it will need.
"I will continue to encourage small businesses and tax practitioners to consider using the ADR pilot as these latest results show that participants can benefit significantly in time and cost. Tax dispute resolution has been in need of reform for far too long and this is, I believe, the shape of things to come; I look forward to further HMRC announcements on the rolling out of ADR."
A general introduction of the ADR service is expected later in 2013.