In ICAEW Rep 50/25, ICAEW has responded to the government’s consultation on options for improving HMRC’s approach to resolving disagreements with taxpayers, focusing on HMRC’s ADR and statutory review processes.   

ADR and statutory review 

The taxpayer can request to use ADR during a compliance check. This involves a trained mediator from HMRC working with the taxpayer and the HMRC caseworker to help resolve the dispute. If the taxpayer disagrees with HMRC’s decision at the end of the compliance check, they will be offered statutory review. If the offer is accepted, an officer from HMRC’s Legal Group will then check that the decision is correct and in line with HMRC policy.  

The ADR and statutory review processes differ for direct and indirect taxes. ICAEW explained the processes in greater detail and highlighted some of the key differences between direct and indirect taxes, in an earlier article.  

ICAEW’s view 

In its response to the consultation, ICAEW has expressed support for: 

• improved functionality for digital routes to appeal. ICAEW has encouraged HMRC to ensure that such routes are as user-friendly as possible for agents and taxpayers;
• the alignment of appeal routes to statutory review across all heads of taxes. However, ICAEW disagrees with the proposed format set out by HMRC and suggests that the existing direct taxes methodology is used instead as the starting point; and   
• more frequent use of ADR. ICAEW suggests that this could be achieved by encouraging HMRC case workers to consider ADR as way to resolve impasses and to agree fact patterns. 

ICAEW believes that the power for determining whether a case is suitable for ADR should be moved within HMRC from individual caseworkers to a central team. Greater use of ADR could reduce the amount of time spent at tribunal agreeing fact patterns or prevent such cases going to tribunal at all.  

The government had asked respondents to the consultation to consider if it is “feasible for HMRC to charge the taxpayer for using the ADR service”. ICAEW believes that there is insufficient justification for charging taxpayers to enter into ADR, except in very limited circumstances. The reasons given by ICAEW include that imposing a charge could discourage use of ADR when it’s already low.