THE TAXMAN has launched its alternative disputes resolution pilot today.
The pilot has been launched in the North West and North Wales for small and medium enterprises. Under the scheme, independent HMRC facilitators who have not been involved in the case will be used to resolve disputes that arise during HMRC’s compliance checks. This is designed to avoid tribunal hearings and reducing costs for both parties.
In 2011, another pilot was aimed at cases heading towards the tax tribunal. HMRC said that 60% of these disputes were either fully or partially resolved, with the “overwhelming majority” fully resolved.
Jim Stevenson, HMRC’s assistant director, local compliance, said: “We have found that often there are communication problems. So the HMRC facilitator will help all parties reach a shared and full understanding of the disputed facts and arguments. They will also ensure there is good communication, and help explain what each side is trying to say to the other. The aim is to resolve the dispute or, if not, as many issues as possible.”
However, John Cassidy, tax investigations partner at PKF, said that there must be a guarantee of independence.
“SMEs will need to be reassured that a procedure reliant upon an HMRC facilitator is genuinely independent – bosses will shun the ADR unless they believe that they’ll get a fair hearing from the taxman,” he said. “Entrepreneurs may also point out that the Treasury is asking them to make a leap of faith that it is not prepared to make itself – why can’t the resolution procedure be mediated by the SME’s tax advisers, provided that they are a reputable practice?”
The CIoT said that this pilot phase was essential to the long-term success of the project.
Andrew Gotch, chairman of the CIOT’s Owner Managed Business Sub-Committee, said it was “very important that HMRC are able to gather reliable data from this next stage in the ADR pilot”. He urged small businesses to take advantage of the facility if possible. “This is an entirely voluntary process, from which neither side can possibly emerge worse off,” he said.
“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 other’s’ positions better, thus saving stress, time and costs all round”.
CIot urges HMRC to consider a delay to the 1 September 2017 introduction of its new corporate offence of failure to prevent the criminal facilitation of tax evasion
The current business rates system is over-complex and reform is needed, but reforms should focus first of all on simplifying the appeals process, particularly for businesses which are subject to business rates exemption
The CIoT has called on the government to rethink its approach to ensuring online sellers pay the correct amount of VAT.
Jane Ellison to serve as 'tax minister' following ministerial responsibilities for public health. David Gauke become chief secretary to the Treasury