Future IR35 Dispute Resolution?

HMRC are to extend a pilot trial to Alternative Dispute Resolution (ADR) to small business compliance checks. Earlier in 2011, HMRC carried out a pilot trial ADR, aimed at improving the process of resolving tax disputes involving Small and Medium Enterprises (SME's).

During the pilot of last year, cases were selected by the Revenue from those which had already been through HMRC's internal review and looked destined for Tax Tribunal. The results of that pilot were encouraging and suggested that ADR might work at an earlier stage in the Compliance Check Process. 60% of the disputes during the pilot were either fully or partially resolved, with the majority fully resolved to the satisfaction of both the taxpayer and HMRC.

Last year's pilot was well received by both taxpayers and their agents, who welcomed the opportunity to use ADR as a means to resolve disputes with HMRC.

Initially, the latest pilot will be restricted to SME's in the regions of North Wales and the North West but, may be extended to other regions if resources permit. Unlike the previous experiment, taxpayers and their advisers will also be able to put cases forward for ADR on a voluntary basis.

What does ADR involve?

ADR involves appointing one of a small team of trained HMRC 'facilitators', covering both direct and indirect taxes, to compliance checks that have reached stalemate. The facilitator works with the taxpayer and/or their representative and the original HMRC caseworker to try to reach an agreement and resolve the dispute. Whilst the facilitator will be an HMRC employee, in each case they will have had no prior involvement in the dispute and their remit is to act independently. Their role is to objectively assist discussions between the parties.

Participation in the pilot may shorten the time of a businesses Compliance Check and help resolve a dispute without having to go to Tribunal, potentially saving time and money.

Availability of ADR will be restricted to cases where an appealable tax decision or assessment has not been made. Where a taxpayer and/or their agent believes that ADR may hasten resolution of their dispute with HMRC, they can make a telephone application to be included in the pilot. HMRC will then advise whether a case has been accepted within 30 days of receipt of the request.

Examples of cases suitable for ADR pilot

Cases potentially suitable for this pilot may involve any of the following features:

  • Restoring communication.
  • Facts which are capable of further clarification.
  • Disputes that may benefit from obtaining more suitable evidence.
  • Issues capable of further mediation.
  • Fact and/or technical matters in which there is legitimate scope for any party to obtain a better understanding of the other's arguments.

Examples of cases not suitable for ADR pilot

  • Cases which cannot be legitimately settled within the parameters of Litigation and Settlements Strategy other than by litigation.
  • Issues which require clarification in the wider public interest – these might include matters of industry wide application.
  • Issues linked to or involving co-ordinated appeals.
  • Cases that could only be resolved by an HMRC departure from its established technical or policy review.

Where the case falls within the appropriate criteria, the facilitator will contact the taxpayer or their adviser to explain the process, and ask for the completion of a simple Memorandum of Understanding to confirm the taxpayer's participation in and commitment to ADR.

Taking part in the pilot will not prejudice a taxpayer's case and does not affect their right to have an internal review or to take their appeal to Tribunal. The facilitator will not be called as a witness by HMRC or be involved in the appeal.

At the end of the facilitating process HMRC will ask taxpayer's and their representatives for feedback on how well the process has or has not worked. HMRC will monitor the results of each case to seek out opportunities to improve the process and to ascertain whether ADR could be made more widely available in the future.

Potentially those contractors, in the North Wales and North West regions, and  involved in an IR35 dispute during the pilot period, could seek to use ADR if circumstances permit. Furthermore, depending on the success of the trial,  it maybe that ADR could be called upon in the future to help speed up and/or resolve IR35 enquiries.

To apply for ADR, call 01492 523747 between 09:00 – 16:00, Monday – Friday or visit HMRC online.

1 Comment

Leave a Reply

Your email address will not be published.

★ ★ ★ ★ ★

Very pleasant. Excellent price for what I needed. I will be a returning customer.

Rhino Review

Mr Paul D

Great staff. Customer focused and a team who recognise and understand their customers 100%.

Rhino Review

Vijay S

Fantastic accountants who helped me submit my last 2 years personal tax returns! I really rate this company!!!

QAccounting Review

Natalie

Fantastic service.

Rhino Review

Marco G

Been with QAccounting for several months now, very good service, very personal and the best prices I have seen.

QAccounting Review

Muhammed A

I switched over to QAccounting a few months ago and haven't looked back. I get to speak to my own client manager and accountant, the prices were the best I had seen, and I paid exactly what it said online (no extra costs). Very happy with QA.

QAccounting Review

Jeremy H