The service, which uses independent HMRC facilitators to help customers resolve their disputes with HMRC at an early stage, was initially offered from January to small businesses in the North West, South West, Wales and London. It is open to companies with disputes involving VAT or direct taxes.
HMRC said that the limited pilot had shown that ADR could help parties save time and money by resolving their disputes without resorting to the tax tribunal.
"The aim is to resolve the dispute or, if not, as many issues as possible," its assistant director for local compliance, Jim Stevenson, said. "HMRC facilitators help all parties reach a shared and full understanding of the disputed facts and arguments. Because there are often communications issues the facilitator will help explain what each side is trying to say to the other."
The ADR process used by HMRC is a form of mediation, in which a third party facilitator helps the parties to come to a mutual, binding agreement. If agreement cannot be reached, the parties retain the right to proceed to the Tribunal Service and Courts for binding determination. Use of the pilot does not affect a party's right to a tribunal hearing under existing processes, or its right to review or appeal a decision.
The projects' facilitators are specially-trained members of HMRC staff who have not previously been involved in the dispute. Cases will be potentially suitable for the pilot if they could benefit from obtaining more suitable evidence or involve facts or technical matters capable of further clarification.
However HMRC said that the ADR route would not be suitable for more complex cases, such as those that may involve a departure by HMRC from established policies or those which require clarification in the wider public interest - perhaps because they are of industry-wide application.
"HMRC is clearly serious about embedding ADR into its approach to disputes, however to date they have generally been more successful in applying it to smaller businesses," said tax law expert Heather Self of Pinsent Masons, the law firm behind Out-Law.com. "HMRC has also announced a significant extension of its Large and Complex pilot, and it remains to be seen whether it will be able to achieve its target of 50 large cases by March 2013."
The ADR pilot for large and complex disputes is already available throughout the UK, albeit on a smaller scale.