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Introduction

Alternative dispute resolution (ADR) is widely used in the commercial world as a cheaper, more time efficient and effective way of dealing with issues and disagreements than formal litigation. ADR can come in a number of different formats including mediation, arbitrations and third party negotiation.

Historically, HMRC disputes tended to be resolved either by protracted correspondence and negotiation, or at the Tribunal. Enquiries were often time consuming and costly affairs with neither party achieving a satisfactory outcome.

Following a successful trial in 2013, HMRC made ADR available to individuals and small and medium enterprises (SME). ADR was later extended to large and complex cases. Note that the paragraph 8 of the Practice direction ― pre-action conduct and protocols that applies to the First-tier Tribunal recommend the use of ADR to both parties as a method of dealing with disputes.

The type of ADR HMRC is most likely to undertake is mediation, where an independent mediator acts as a facilitator