The President of the First-tier Tribunal (Tax) (the “Tribunal”) has today published a practice statement (the “Statement”) on the Tribunal’s approach to Alternative Dispute Resolution (“ADR”).
The Statement can be viewed here.
During a season in which significant numbers of tax appeals in the Tribunal are facing delays (as a result of the Covid-19 pandemic), the Statement is a welcome reminder that ADR may offer a different way to secure a solution in suitable cases. It also serves as a reminder that where ADR has been refused unreasonably by HMRC, consideration should be given to whether costs sanctions should be sought. (For our ADR team’s analysis of three recent High Court cases in which the Court imposed cost sanctions where a party refused to participate in ADR, see our bulletins here and here.)
The Statement is made to further to rule 3(1) of the Tribunal’s procedural rules, which provides that the Tribunal should, where appropriate (a) bring to the attention of the parties the availability of ADR and (b) facilitate the use of ADR.
The Statement highlights that:
- currently, after a tax appeal has been notified to the Tribunal, HMRC will use ADR only in appeals that are categorised as “standard” or “complex” by the Tribunal;
- even if ADR does not result in a complete resolution of an appeal, it can help in narrowing the issues between the parties (for resolution by the Tribunal); and
- the Tribunal will usually facilitate the use of ADR at any stage of an appeal by staying proceedings (normally allowing a stay of up to 150 days) provided that doing so will not jeopardise any hearing dates that have been fixed.
For a more detailed consideration of the use of ADR in the context of tax disputes involving HMRC, see our article here.