HMRC saw a 62% rise in disputed tax collected through the use of mediation last year, collecting £40.8m, up from £25.2m in 2016/17, according to analysis by RPC
The number of successful tax dispute settlements through alternative dispute resolution (ADR) increased 23% from 370 in 2016/17 to 455 in 2017/18.
The law firm says the figures indicate HMRC seems increasingly willing to use ADR to settle disputes with taxpayers, which has a number of advantages over pursuing cases through the legal system.
These include greater speed compared to more formal processes; reduced litigation costs; and increased confidentiality, since neither the terms of any settlement or the name of the taxpayer concerned will be disclosed, unlike in publicly-reported tax appeal cases.
RPC also points out that mediation can present an opportunity for HMRC to clear tax disputes that may have been ongoing for several years and unlike formal litigation, mediation can be used at any stage in the dispute resolution process.
Adam Craggs, partner and head of tax disputes at RPC, said: ‘With the Treasury continuing to exert pressure on HMRC to increase the tax yield, mediation offers an opportunity for long-running and complex disputes to be resolved without the need for formal litigation and the inevitable delay that can bring.
‘HMRC seems to have realised the value that mediation can offer to both sides in a tax dispute. It can provide a speedy and effective method of resolving tax disputes which benefits both taxpayers and the Treasury.’
Report by Pat Sweet
