Tax disputes: Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) is a different way of dealing with a tax dispute with HM Revenue and Customs (HMRC).

Ways to resolve tax disputes

ADR aims to help you resolve disputes or get agreement on which issues need to be taken for a legal ruling. ADR doesn’t affect your right to appeal or ask for a statutory review.

This guide tells you about the ADR process and how to apply for it.

ADR explained

You can apply for ADR if you’ve stopped making progress in your dealings with HMRC. For example during a compliance check.

ADR gives you the option of having someone who’s not been involved in your dispute, to work with you and the HMRC officer dealing with it. The person leading the ADR will act as a neutral, third party mediator. They don’t take over responsibility for the dispute. They’ll work with you both to explore ways of resolving the dispute through meetings and telephone conversations. They’ll help you focus on the areas that need to be resolved and, if needed, help re-establish communications between both parties.

In some cases you might agree with HMRC to jointly pay for a professional independent mediator.

To keep your legal rights you should appeal or ask for statutory review as well as asking for ADR. You can ask for ADR before HMRC have made a decision.

You can find out more about how HMRC checks your tax and if you disagree with a tax decision.

Who can use ADR

ADR is mainly aimed at helping business customers with disputes. But if you have a dispute about your personal tax affairs it could be right for you. You, your accountant or tax adviser can ask HMRC to consider ADR. If HMRC are carrying out a compliance check, ADR may shorten the time of the review.

When ADR might help

ADR can be useful if:

  • you and HMRC have different views on exactly what’s happened - the facts
  • communication between you and HMRC has broken down
  • you need to know why HMRC haven’t agreed evidence that you’ve given them and why they want to use other evidence
  • HMRC need to explain why they need more information from you
  • you’re not clear what information HMRC has used and think they may have made wrong assumptions

Disputes not suitable for ADR

ADR isn’t right for disputes about:

  • requests for time to pay or similar issues
  • fixed penalties on the grounds of reasonable excuse
  • tax credits
  • PAYE coding
  • HMRC delays in using information
  • cases that HMRC’s criminal investigators are dealing with
  • default surcharges

How to ask for ADR

If you’re a large business and have an HMRC Customer Relationship Manager or a dedicated caseworker, you should first contact them to discuss ADR.

For small and medium sized businesses or if you’ve complicated personal tax affairs, there’s an online form to send your details to HMRC. Or if you have an agent or tax adviser, they can do this on your behalf.

Apply for ADR using the online form

HMRC will let you know within 30 days of applying if ADR is right for resolving your dispute. If your dispute is handled by ADR, you’ll be asked to fill in an agreement known as the Memorandum of Understanding. This sets out the process and confirms your agreement to take part. If at anytime time, the terms of the agreement are broken, HMRC can remove your dispute from the process.

If you’re not sure whether ADR is right for your dispute and need more information please refer to alternative disputes resolution.

If your dispute can’t be resolved

If HMRC have made an appealable decision, you can ask for your dispute to be referred to an independent tribunal for a hearing. You can also ask for a statutory review. What to do if you disagree with an HMRC decision.

Published 8 December 2014
Last updated 3 February 2016 + show all updates
  1. Contact details added to the How to ask for ADR section.
  2. First published.