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Obstacles to ADR in tax disputes

The primary recommendation of the Tax Disputes Review considered by members of HMRC's Business Tax Forum at the end of 2009 was the greater use of Alternative Dispute Resolution (ADR) and HMRC has indicated it may pilot an ADR scheme. This would appear to conflict with HMRC's existing Litigation & Settlement Strategy which strives to litigate any dispute with more than a 50% chance of success.

Whilst we await details of a proposed scheme (should it proceed) HMRC has already attempted to provide the taxpayer with an alternative to immediate litigation with the implementation of the internal review procedure in 2009. However this procedure involves the review of the decision by another HMRC officer — as opposed to an independent third party — arguably simply delaying the eventual filing of an appeal and the onset of litigation.

Whilst the use of ADR within commercial litigation has its place...

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