Alternative dispute resolution for tax disputes

Alternative dispute resolution can help resolve suitable tax disputes through a facilitated process, but it does not replace the need to protect review or appeal deadlines. Check eligibility, the disputed facts and the stage of the case before applying.

Prepare a focused explanation of what remains unresolved and the evidence each side relies on. ADR is not a promise of settlement or a reason to ignore formal correspondence.

Identify the problem mediation could help resolve

Describe why the dispute has stalled: a factual disagreement, a misunderstanding, unclear evidence or a breakdown in communication. HMRC's alternative dispute resolution process uses a trained HMRC mediator to help the taxpayer and caseworker explore resolution. The mediator does not take over responsibility for deciding the dispute. ^[1] The process should therefore be approached as structured assistance with discussion, not as a substitute judge issuing a binding ruling.

Prepare a short account of the tax issue and the points on which agreement has not been reached. Identify what clarification would help, such as the assumptions behind an adjustment or why particular evidence was rejected. A focused description allows suitability to be assessed more effectively than a general complaint that the enquiry has taken too long or that every HMRC conclusion is wrong.

Check eligibility and the procedural stage

ADR is not available for every issue. HMRC excludes categories including debt recovery or payment disputes, automatic late filing or payment penalties, PAYE coding notices and criminal investigation cases. Applications are considered individually. ^[1] Check the published exclusions and the actual dispute before investing time in a mediation pack. A separate complaint, appeal or payment-plan process may be the appropriate route instead.

The stage matters as well. After a decision or review, the required appeal steps may need to be completed and a tribunal acknowledgement obtained before ADR can be requested. ^[1] Ask the adviser to map the current position and preserve the relevant deadlines. Do not assume that submitting an ADR application pauses the time for a statutory review or tribunal appeal without the necessary procedural action.

Prepare facts and evidence for a useful discussion

Create a list of agreed facts, disputed facts and documents each side relies on. Link the key records to a concise chronology and explain any gaps. Avoid turning the preparation into a long repetition of previous letters. The purpose is to make the point of disagreement visible and identify what information could narrow it, even if the parties ultimately need a legal ruling on the remaining issue.

If a calculation is disputed, prepare a comparison showing the assumptions and numerical effect of each position. If the disagreement concerns a transaction's purpose, gather contemporaneous contracts and correspondence rather than relying solely on a later explanation. Keep factual evidence distinct from legal advice and have confidentiality or privilege questions reviewed before sharing material. The process works better when participants know what they can discuss and what requires further advice.

Agree participation and decision-making arrangements

HMRC's process requires commitment to its participation principles, including providing information and making time for meetings. ^[1] Confirm who will attend, who can explain the records and who has authority to consider a proposed resolution. For a company, that may require coordination between the finance team, directors and advisers. A meeting can achieve little if the person with essential knowledge or decision authority is unavailable.

Prepare questions for the mediator about format, documents and next steps. Agree internally how proposals will be checked and approved, including the tax calculation and any effect on other years. Do not accept an unexplained number solely to end a difficult conversation. A proposed resolution should be understood in terms of the issues settled, the evidence and the actions needed to give it effect.

Record what is resolved and what remains open

At the end of the process, obtain a clear record of agreed points and unresolved issues. Check whether further formal documents, amended calculations or procedural steps are required. If no agreement is reached, preserve the evidence and identify the next deadline. Tax tribunal appeals: questions for an adviser explains questions to ask about tribunal proceedings, which may still be necessary for matters that mediation cannot resolve.

For assistance preparing the factual file and considering suitability, see HMRC enquiry response support. Provide the dispute chronology, decision documents and current procedural dates. Clarify whether the work includes participation in ADR or only preparation support. No outcome should be promised in advance; the practical aim is to improve understanding, narrow issues where possible and leave a clear route for anything that remains disputed.

Keep the mediation preparation separate from the final agreed record so a draft proposal is not later mistaken for an accepted settlement. If the discussion affects another return or a connected taxpayer, identify the need for separate advice and authority. Follow through on each agreed action with a named owner and evidence of completion rather than relying on the fact that the meeting itself has ended.

Illustrative scenario

A taxpayer and HMRC disagree about the meaning of transaction records. The adviser considers ADR while maintaining the separate timetable for any formal appeal.

Preparation checklist

• Identify the unresolved issue
• Check ADR suitability
• Organise key evidence
• Protect formal deadlines separately