A tax dispute arises where there is a difference of opinion between HMRC and a taxpayer. This may relate to one or more entries on a tax return. Tax disputes can arise in respect of facts, the law, or a combination of both.

Your options for resolving tax disputes vary depending on the nature of your dispute, the amount of tax at stake and your current situation with HMRC.

Most tax disputes are settled by reaching an agreement with HMRC. If no agreement is made, you have the right to ask HMRC to carry out an independent review of its decision. This is known as an HMRC review and it is undertaken by an HMRC officer who has not previously been involved in the case. The HMRC review can result in the original decision being upheld, varied or set aside. If the decision is set aside, that is the end of the matter. If it is upheld or varied, you will either need to pay the amount of tax due or pursue further action.

ADR mediation is a process for resolving tax disputes with HMRC without going to court.

ADR can be applied for or offered by HMRC. Where a case is accepted for ADR, a mediator is appointed to manage what is normally a one-day mediation session between you and HMRC. The mediator is normally a trained HMRC officer who will not have been previously involved in the case. In some instances, it may be possible for a specialist third-party mediator to be appointed, the cost of which can be shared with HMRC.

ADR is in most cases more cost effective than litigation and completed far more quickly. Around 80% of ADR cases are successfully settled through the mediation process rather than proceeding to litigation*.

In some cases, it is not possible to settle a tax dispute by agreement with HMRC. In these instances, you have the right to have your appeal considered by the Tax Tribunals and Courts.

The Tax Tribunal is independent of HMRC and has a number of different options available to hear each appeal. More complex cases will involve an in-person (or remote) hearing in front of a Tribunal Judge, who will review the full case history, hear witnesses and assess all evidence before making a decision. Cases are typically first heard before the First-tier Tax Tribunal, but can be appealed to the Upper Tribunal, the Court of Appeal and the Supreme Court, depending on the circumstances of the case.

Our team of experts can help you at all stages of your dispute to ensure that is it resolved as quickly and seamlessly as possible.

We can assist in resolving your tax dispute through ADR. In the first instance, we will review your dispute to consider its suitability for ADR. If it is, then we will handle all aspects of the ADR process with HMRC, from the initial application stage, through to any formal agreement.

If ADR is not suitable or unsuccessful, our team has extensive experience of preparing cases for Tribunal, including liaising with the Tax Counsel on your behalf, preparing the case evidence, including document bundles and potential witnesses, and guiding you through the full litigation process.

Before and during the litigation stages, our team regularly provides tax-expert witness services and can deliver court compliant reports for either claimants, defendants or on a joint instruction basis. Our experts have experience of giving evidence in court and participating in mediation and arbitration proceedings.

Examples of disputes where our experts have provided services include:

• Professional negligence cases (particularly in respect of failed tax schemes)
• Tax Tribunal proceedings
• Commercial disputes involving tax
• Divorce and matrimonial
• HMRC disputes

For more information on how we can help you to resolve your tax dispute, contact us now.

*Source: HMRC Annual Report and Accounts 2021 to 2022