HMRC figures show a ‘worrying’ 25% drop in the use of alternative dispute resolution (ADR) to settle tax disputes over the past year, according to law firm RPC. The number of ADR cases fell from 553 in 2017/18 to 417 in 2018/19.
RPC says that fewer taxpayers are applying to use ADR because HMRC refuses to mediate in far too many cases. Requests to use mediation fell 19% from 1,411 in 2017/18 to 1,144 in 2018/19.
Robert Waterson, a tax disputes partner at RPC, said HMRC will refuse requests for ADR from taxpayers who have appealed to the tribunal, if HMRC has already provided a full breakdown of how it calculated the disputed tax in a statement of case.
‘HMRC can be very inflexible. In most disputes, you can have full information on its case or you can have mediation, but not both’, Waterson commented. This makes it difficult for taxpayers to know what HMRC’s position is and prepare for ADR.
RPC believes the figure of £45m in additional tax brought in by HMRC though ADR in 2018/19 could be much higher if HMRC were open to using it in more cases.
‘If HMRC took a more sensible approach to mediation, it could bring in a lot more tax and avoid formal litigation before the tax tribunal’, Robert Waterson said.
HMRC figures show a ‘worrying’ 25% drop in the use of alternative dispute resolution (ADR) to settle tax disputes over the past year, according to law firm RPC. The number of ADR cases fell from 553 in 2017/18 to 417 in 2018/19.
RPC says that fewer taxpayers are applying to use ADR because HMRC refuses to mediate in far too many cases. Requests to use mediation fell 19% from 1,411 in 2017/18 to 1,144 in 2018/19.
Robert Waterson, a tax disputes partner at RPC, said HMRC will refuse requests for ADR from taxpayers who have appealed to the tribunal, if HMRC has already provided a full breakdown of how it calculated the disputed tax in a statement of case.
‘HMRC can be very inflexible. In most disputes, you can have full information on its case or you can have mediation, but not both’, Waterson commented. This makes it difficult for taxpayers to know what HMRC’s position is and prepare for ADR.
RPC believes the figure of £45m in additional tax brought in by HMRC though ADR in 2018/19 could be much higher if HMRC were open to using it in more cases.
‘If HMRC took a more sensible approach to mediation, it could bring in a lot more tax and avoid formal litigation before the tax tribunal’, Robert Waterson said.
