HMRC begins mediation trial for small firms

Businesses invited to refer tax grievances free of charge


HM Revenue and Customs has begun the trial of a mediation service for small firms beleaguered by unfair and over-zealous tax inspectors.

The Alternative Dispute Resolution (ADR) service, which is being tested in the north west and north Wales, invites small businesses to refer their tax grievances to a trained HMRC official, free of charge.

The mediators involved in the trial have been coached in dispute resolution practices, and HMRC will ensure they have had no previous involvement in the cases they assess.

Ultimately, the Revenue will have the final say on whether a dispute goes to mediation or not. It will strive to make a decision on all ADR applications within 30 days.

The new trial follows a similar, smaller pilot at the beginning of 2011, involving a handful of aggrieved businesses. During this test, 60% of cases were partially or completely resolved.

If the ADR service is rolled out nationwide, HMRC believes it will play a key role in helping smaller businesses deal with excessive tax demands, or questionable treatment from inspectors. The Revenue has recently come under heavy criticism for its overly harsh treatment of small firms during a nationwide clampdown on poor record-keeping.

Andrew Gotch, of the Chartered Institute of Taxation, welcomed the mediation trial, saying:

“This is an entirely voluntary process, from which neither side can possibly emerge worse off.

“In fact, evidence from the earlier phase of the pilot suggests that participants usually emerge far better off either in terms of getting a solution or understanding each others’ positions better, thus saving stress, time and costs.”

 

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