Alternative dispute resolution (ADR) is sometimes touted as an excellent enquiry resolution mechanism, and the ‘solution’ to long-running tax enquiries. Instead, however, I think of it as a trade-off.
It often entails a six-month delay with interest accruing and the risk of putting a live and ill-considered oral account from a taxpayer in front of an HMRC decision maker.
Clearly, there is a risk and potential cost to ADR, beyond professional fees. Is it a ‘solution’, or a calculated trade-off?
The possible upside is a resolution, or at least a meaningful step forward here today. The downside is both sides entrenching, or in the extreme the case being outright lost where, for instance, the client volunteers information which allows HMRC to push for closure in their favour, or gives HMRC the confidence to progress the case to tribunal.
