Tax disputes can occur between tax collection entities like Her Majesty’s Revenue and Customs (HMRC) and taxpayers. While all involved parties would prefer resolving differences collaboratively and coming to an agreement following discussion, there are instances when differences or disputes cannot be solved easily.

Such disputes may require legal action and the taxpayer may require a solicitor UK. A number of law firms in UK work with tax authorities for dispute resolution, going as far as litigation when necessary. They can help a client negotiate a settlement, contact HMRC, or prepare a fact-based case.

In order to prevent tax disputes from occurring and managing and resolving tax disputes that do occur, tax dispute resolution processes are put in place and they are effective when dealing with an excessive volume of tax disputes.

Litigation and Settlement Strategy

HMRC works towards minimising the scope for disputes and this is one of the key parts of their overall customer strategy. However, they also have put in place a framework within which HMRC resolves tax disputes through civil law procedures. This is called the Litigation and Settlement Strategy (LSS).

The LSS is applicable whether the dispute is resolved through agreement or litigation and under the LSS, dispute is given a wide meaning. Thus, when seeking legal advice UK for your tax-related problems, a boutique consulting firm may suggest considering the LSS.

When engaging in disputes, HMRC follows practices that ensure the law is applied fairly and consistently and they generally don’t take up a tax dispute unless it is likely to secure the best practicable return for the Exchequer.

Looking at the handling of disputes, HMRC will always try to handle them non-confrontationally and collaboratively, ensuring transparency. However, if a collaborative method proves to be unsuccessful, HMRC will consider other options. Additionally, if tax evasion is involved, HMRC will consider a criminal investigation.

When resolving disputes, HMRC will always do so in accordance with the law, either through agreement or litigation. If a dispute is to be resolved through litigation, the taxpayer may need representation from one of the many law firms in London.

If there are a range of possible figures for tax due, HMRC will consider how to secure the right tax most efficiently. They will also consider the settlement terms of one dispute when looking at other disputes.

Alternative Dispute Resolution

When a dispute cannot be resolved, Alternative Dispute Resolution or ADR methods will also be considered. Individuals trying to resolve personal tax issues, organisations trying to resolve business tax issues, and agents representing personal or business tax clients can apply for ADR.

According to HMRC, ADR can be used when communications between HMRC and the taxpayer have broken down, there are disputes about the facts, a dispute appears to have been due to a misunderstanding, or HMRC needs to explain why they require more information from the taxpayer. In addition to this, ADR may be used when the taxpayer wants to know why HMRC did not agree with the evidence provided or want to use other evidence or the taxpayer does not have clear understanding of the information used by HMRC and think they have made wrong assumptions.

ADR makes use of an HMRC mediator who will work with the HMRC officer dealing with the dispute and the taxpayer. The mediator may help the taxpayer focus on areas that need to be resolved but will not take over responsibility of the dispute.

ADR does not affect the taxpayer’s right to appeal or request a statutory review and ADR methods are used before or after HMRC has issued a decision that can be appealed against and at any stage of an inquiry, including during or after a compliance check.

Unfortunately, there are a number of disputes ADR cannot be used for, including debt recovery and payment issues, tax credit disputes, and PAYE coding issues.

Thus, when dealing with an excessive volume of tax disputes, it is best to consult with law firms in London and get legal advice UK from a solicitor to have a clear idea of the options available to you and the course of action you should take.

Published date - June 11, 2020