When I started working in tax more than 30 years ago the world was a very different place. Self Assessment had yet to be “invented”, I worked on accounts produced by a very expensive Hewlett Packard programmable calculator but, most of all, I worked in a town with its very own Tax Office (East Dereham in Norfolk). This meant that every morning, regular as clockwork, I bought my paper standing next to the District Inspector. He was a very tall and solemn gentleman who knew very well who I was, as I did him, and we kind of nodded at one another in a knowing manner exchanging a quick “Morning”. We were not friends, hardly acquaintances, but it was good to understand who he was and what he stood for.
Later, as I became more knowledgeable about “tax” I saw him professionally and had the dubious pleasure of appearing for some of my clients at the local Commissioners’ Meeting (a kind of Tax Magistrates Court) to explain why the Revenue (not yet HMRC) should allow their appeal against some assessment or other and why they had failed to file accounts. It was a very gentle world although at the time it seemed quite exciting and it was nerve-wracking appearing in front of a panel of worthies. A far-flung way away from the digital world we now inhabit and where there are in practice no local tax offices and I have no clue as to the identities of any of the Tax Inspectors who review tax information (always assuming there are real people and they have not all been replaced by computers).
In the vast majority of cases this is fine. Tax computations are processed and no queries are raised and all is well. However, woe betide anyone where there is something out of the ordinary. Who is there to explain to? The best one can do is to fill the “white space” in a tax return with a summary of the position and leave it to the HMRC computers to see if that is enough. Of course HMRC can always launch an enquiry into a return and ask lots of questions, some relevant and some not, to satisfy themselves that the figures are in order. This process is done via correspondence and, whilst time scales are set for replies, this can be a long and tiring (not to mention expensive) exercise often with months elapsing between salvos of letters.
However, never fear, ADR (Alternate Dispute Resolution, or mediation to you and me) can gallop to the rescue. HMRC are actively encouraging outstanding disputes to be settled via ADR. Almost anything, short of a criminal prosecution, can be submitted for consideration for ADR and HMRC are keen to engage on this basis. There is a simple form to complete and, within 30 days, HMRC will conclude whether ADR is a possible solution – it often is. The process is then much as any other mediation solution a question of setting aside a day, meeting up with HMRC in the presence of a mediator, and talking the whole thing through. An almost unheard of opportunity to get to see a person about your tax affairs, talk, debate and explain, and, in more than 80% of cases, come to a conclusion. In fact pretty much as we did it (minus a mediator) 30 years ago!
The wonder of discussing with a real person (yes HMRC are really human) can often untangle in minutes issues that, on the end of correspondence and delay, look really complex. Scales fall away from the eyes of both parties and a bit of common sense bridges the gap. Not always – and not perfect, but a marked improvement on months of wasted time and uncertainty.
ADR (Another Dispute Resolved as I like to refer to it) strikes again.
ADR Accredited Civil and Commercial Mediator, Certified Accountant and member of the Chartered Institute of Taxation (former Chair of the East Anglia Branch), university lecturer and trainer and a member of the CIOT Dispute Resolution and Litigation working group.