Her Majesty’s Revenue and Customs (HMRC)’s new code of governance published on 1 November 2012 aims to resolve tax disputes collaboratively and by agreement, with “only a very small minority” requiring resolution by legal action. The code of governance endorses HMRC’s earlier Litigation and Settlement Strategy (updated in 2011), whose stated aim is to handle disputes “non-confrontationally and by working collaboratively with the customer wherever possible”. Continue reading
The UK’s HM Revenue & Customs (HMRC) is now supporting ADR in the resolution of a wide range of tax disputes. On Monday 22 October Herbert Smith Freehills will host a Tax ADR Interest Group for stakeholders at our offices in London to discuss key recent developments. Agenda items include the National Audit Office’s report on settling tax disputes, HMRC’s draft governance paper, HMRC’s ADR pilots and guidance, and confidentiality in mediation. Delegates include Edward Troup, the newly appointed HMRC Tax Assurance Commissioner, who will offer his view on resolving tax disputes through ADR. If you would like further information about this session please contact Rupert Shiers, a partner in the Tax Disputes team in London, and a CEDR accredited mediator.
The Inspector-General of Taxation published his Review into the Australian Taxation Office (ATO)’s use of early and alternative dispute resolution on 31 July 2012.
The Review examines the effectiveness of the ATO’s dispute resolution practices generally. The Inspector-General was requested to review procedures after a number of concerns were raised by stakeholders. Notwithstanding the ATO’s high level commitment to earlier engagement with taxpayers to resolve disputes (including a requirement for ATO managers to consider the use of ADR in cases being litigated), , it was alleged that the ATO was not making sufficient use of dispute resolution opportunities, instead preferring taxpayers to progress disputes through formal channels.
The Inspector-General found that, at a high level, the ATO is committed to early engagement with taxpayers to resolve disputes. However, he made 21 recommendations for ATO staff to improve and strengthen practices, and the ATO only fully disagreed with one of these.
The Inspector‑General also suggested that the Australian Government consider amending tax laws to give the Commissioner of Taxation the power to extend the objection period at the taxpayer’s request, for the purpose of engaging in ADR processes. The Government has indicated that it will consider this alongside proposals for the reform of self assessment.
The Inspector-General’s report is available here.
The UK’s HM Revenue & Customs (HMRC) is now supporting ADR in the resolution of a wide range of tax disputes. ADR trials are live in relation to large commercial cases, SMEs and individuals whereby an independent HMRC facilitator may assist the parties in resolving their disputes without recourse to the tribunal. The large and complex pilot is being extended for 2012/13 and looks to include around 50 cases. The SME and individual pilot are open to customers nationwide and applications for ADR will continue to be considered until 30 November 2012. According to HMRC this pilot has attracted over 100 applications. Nearly 70 per cent of the applications reviewed by the ADR team have been accepted into the trial and many issues are being resolved. For more information see the HMRC website.
HMRC’s commitment to expanding the use of ADR in tax disputes builds upon two initial ADR pilots (in relation to SMEs and large and complex cases) run in 2011/2012, and the publication in April 2012 of HMRC’s ADR guidance for large and complex cases.
On 21 May 2012, the Tax disputes team hosted a client event on “Handling enquiries and avoiding and resolving disputes“.
Heather Gething, Partner, Head of tax planning and tax disputes at Herbert Smith (Solicitor Advocate and CEDR Accredited Mediator), Sir Gavin Lightman, former High Court judge and experienced mediator, Val Hennelly, Head of CDR, HMRC, and Felicity Cullen QC, Grays Inn Tax Chambers addressed a group of practitioners from HMRC, leading, banks, insurance companies, energy majors, TMT companies, and public sector bodies regarding HMRC’s new arrangements for the settlement of disputes by way of ADR. Chaired by Heather Gething, Val Hennelly covered the tools available to HMRC to settle disputes with large businesses outside of the tribunal process by way of cooperative dispute resolution, Sir Gavin Lightman discussed disputes which are more suitable for resolution by mediation rather than determination by the Tribunal, and Felicity Cullen QC addressed the public law limitations on HMRC’s ability to compromise.
If you have any questions regarding the use of ADR in tax disputes please contact Heather Gething (firstname.lastname@example.org; +44 20 7466 2346).
HMRC is seeking comments on the draft guidance to staff for the implementation of the revised litigation strategy published in July 2011. Comments on the draft guidance should be sent to HMRC by 31 October 2011.
Following HMRC’s original Litigation and Settlement Strategy published in June 2007, HMRC published a refreshed Litigation and Settlement Strategy on 14 July 2011 and draft guidance for staff on the Litigation and Settlement Strategy and the use of ADR on 12 August 2011. All three documents, and the facility for making comments on the drafts, can be accessed here. Continue reading
Gary Milner-Moore and Rupert Shiers, both partners in the Dispute Resolution division, have just become CEDR-accredited mediators.
Rupert, who is a partner in the firm’s tax disputes practice, undertook the CEDR training in a course specially arranged by CEDR and HMRC for tax disputes experts. Rupert is part of a joint public/private sector HMRC working group that meets regularly to discuss progress and developments in ADR in the context of tax disputes.