HMRC extends alternative dispute resolution trial for smaller businesses

The pilot will be available to small and medium-sized enterprises (SMEs) in North Wales and the North West of England where an appealable tax decision or assessment has not yet been made. HMRC will accept applications to be included in the scheme where "a customer... believes that ADR may speed up the resolution of their dispute", it said.

An SME is a company with fewer than 250 employees and either an annual turnover of less than £45 million or an annual balance sheet total of less than £39m.

In cases that are eligible for the extended scheme, HMRC will appoint one of a small team of trained 'facilitators' to work with the business and its HMRC caseworker to try to reach an agreement and resolve the dispute. This facilitator is "completely independent" of the dispute and has had no previous involvement with the case, it said.

The scheme covers both VAT and direct taxes disputes. Opting into the pilot will not affect the customer's right to have a decision reviewed, or to appeal to the tax tribunal, HMRC said.

The scheme will be monitored on a weekly basis and will be extended to other regions when appropriate, HMRC said.

The results of a previous trial, which covered cases that had progresses to an internal HMRC review, had had "encouraging" results, the body said, with 60% of the disputes either fully or partially resolved. Customers "welcomed" the opportunity to use ADR, HMRC said.

Ian Hyde, a specialist in tax disputes with Pinsent Masons, the law firm behind Out-Law.com, said that the extension of the pilot was "good news" for small businesses as it would give them the opportunity to resolve tax disputes without the expense of litigation.

"HMRC has been criticised for allowing big businesses to get away with 'sweetheart' deals whilst at the same time making intrusive record-keeping checks on small businesses," he said.

He said that he hoped the scheme would be extended across the country in the near future.