Alternative dispute resolution

Alternative dispute resolution (ADR) can be a cheaper, more time efficient and effective way of dealing with a tax dispute with HMRC than formal litigation.

Up until now, ADR could be considered either before or after the issue of a formal decision by HMRC. However, once the taxpayer had appealed to the Tribunal and HMRC’s Statement of Case had been served, the First-tier Tribunal would only allow ADR in exceptional circumstances.

However, with effect from 15 June 2020, the Tribunal will allow ADR:

  • where the hearing has yet to be listed ― the Tribunal will issue a stay of 150 days that will put the proceedings on hold during the ADR process
  • where the hearing has been listed ― the Tribunal will only stay proceedings if both the taxpayer and HMRC confirm that they can go ahead on the hearing date if the ADR fails

Practice Statement from the President of the First-tier Tribunal

Although not directly related to coronavirus (COVID-19), it is likely that the pandemic has prompted a review of processes and practices. This widening of the availability of ADR to those within the appeals process is good news. It will allow more taxpayers to enter the ADR process and potentially save them time and money.

Any taxpayer (or their agent if they have one) that has been denied ADR under the previous First-tier Tribunal practice, or who is in the process of litigation but feels that ADR may be helpful in resolving the tax dispute, should consider applying for ADR.

The ADR application is made to HMRC. If the application is accepted, the taxpayer should inform the Tribunal as soon as possible.

For more details of the cases suitable (and not suitable) for ADR and how to apply for ADR, see the Alternative dispute resolution process guidance note.