Taxation (UK) · The procedures relating to compliance checks, appeals and disputes

Alternative Dispute Resolution and Postponement of Tax

Updated 11 October 2026 · Fact-checked

Alternative dispute resolution (ADR) is a voluntary process where an HMRC-trained mediator, independent of the case team, helps you and HMRC settle a disagreement without going to tribunal. Postponement lets you apply in writing to delay paying the tax you genuinely dispute while your appeal is open. Tax you do not dispute stays payable on time.

Understand Alternative Dispute Resolution and Postponement of Tax

A tax dispute usually starts when HMRC issues an assessment or amendment, often after a compliance check, and you disagree. You have a right to appeal in writing within 30 days of the decision. Most disputes never reach a tribunal. There are three routes for settling them.

Internal review is an HMRC officer who was not involved in the original decision looking at the case afresh. HMRC may offer it, or you can ask for it. Tribunal appeal goes to the First-tier Tribunal, which is independent of HMRC. You can use either route, but not both at once for the same decision. If you disagree with the review conclusion, you can still go to the tribunal.

Alternative dispute resolution is different. It is a voluntary, informal way to settle the disagreement, using a mediator who is independent of the HMRC team that made the decision. HMRC uses it for disputes with individuals and businesses. It is only available if both sides agree to take part. It does not take away your right to an internal review or a tribunal appeal. A settlement reached through ADR is only binding if both sides agree to it.

Postponement of tax deals with cash flow. Normally you must pay tax on the due date even if you have appealed. If you think an assessment overcharges you, you can apply to HMRC in writing to postpone payment of the disputed amount. You must state how much you think is overcharged and why. If HMRC agrees, the postponed tax is not payable until the dispute is settled. If HMRC refuses, you can ask the tribunal to decide. The part of the tax that is not in dispute must still be paid on the normal date.

Postponement delays payment but does not stop interest. If the tax is finally found to be due, interest on underpaid tax runs from the original due date. The ACCA tax tables give an assumed rate of 8·50%.

Key rules to remember

Time limit to appeal: Written appeal within 30 days of the date of HMRC's decision; Applies to assessments and amendments. If you miss it, you need HMRC's or the tribunal's agreement to a late appeal.
Postponement application: Apply in writing, stating the amount you believe is overcharged and your grounds; Only the disputed amount can be postponed. The undisputed tax is payable on the normal due date.
Review and tribunal choice: Internal review OR First-tier Tribunal for the same decision; the tribunal remains open after an unfavourable review; ADR is an extra, voluntary route that does not remove either right.
Interest on underpaid tax: Interest = tax paid late × 8·50% × months late ÷ 12; 8·50% is the assumed rate in the ACCA tax rates table. Interest runs from the original due date even when the tax was postponed.
ADR features: Voluntary + independent mediator + agreement needed from both sides; Not a replacement for the right to appeal.

How to solve Alternative Dispute Resolution and Postponement of Tax questions

Use this method for any question on disputes with HMRC, ADR or postponement.

1Identify the HMRC decision being disputed (assessment, amendment, penalty) and its date.
2Note the 30-day written appeal deadline from that date and say whether it has been met.
3Choose the route: accept an HMRC internal review, go to the First-tier Tribunal, or try ADR alongside. State that ADR is voluntary and needs both sides to agree.
4Split the tax into the part you accept and the part you dispute.
5If cash flow is the issue, explain that you apply in writing to HMRC to postpone the disputed amount, giving the amount and grounds. The undisputed tax is still due on time.
6State what happens if HMRC refuses (the tribunal decides) and what happens at the end (postponed tax that is upheld becomes payable, with interest from the original due date).
7Calculate any interest using the rate given in the question or the tax tables, and show the working.

Quickest way: Three-line check: appeal, route, postpone

When to use it: Use it for Section A and OT case questions where you need the answer in under two minutes.

Appeal in writing within 30 days of the decision.
Route: review or tribunal. ADR is optional and does not replace either.
Postponement: only the disputed tax, applied for in writing. Tax not in dispute is paid on time, and interest still runs on postponed tax that proves due.

Common mistakes in Alternative Dispute Resolution and Postponement of Tax

Saying ADR is compulsory or that it replaces the right to appeal.
Students assume any settlement process is a formal stage.
Fix: Say ADR is voluntary, needs both sides to agree and sits alongside your review and tribunal rights.
Postponing the whole assessment when only part is disputed.
Students think an appeal freezes everything.
Fix: Postpone only the amount you believe is overcharged. Pay the rest on the normal due date.
Thinking that appealing automatically postpones payment.
Appeal and postponement sound like one step.
Fix: They are separate. You must make a written postponement application with the amount and grounds.
Ignoring interest on postponed tax that turns out to be due.
Postponed sounds like waived.
Fix: Interest on underpaid tax runs from the original due date. Use the rate given, 8·50% in the tables.
Missing the 30-day appeal limit or counting from the wrong date.
Students count from receipt of a letter or from the end of an enquiry.
Fix: Count 30 days from the date of the decision notice. Flag any late appeal as needing consent.
Treating an internal review and a tribunal appeal as the same thing.
Both are described as reconsidering the decision.
Fix: The review is carried out within HMRC by a different officer. The First-tier Tribunal is independent of HMRC.

Worked examples

Example 1

After an enquiry, HMRC amends Amir's self-assessment return and issues a notice dated 10 March showing an extra £12,000 of tax payable. Amir agrees £4,000 is due but thinks the other £8,000 is wrong. Explain what Amir should do and how much tax he should pay now.

Show the solution

The decision is the amendment dated 10 March. Amir has 30 days from that date to appeal in writing.
He should appeal in writing, saying which part he disputes and why.
He can accept an internal review, or go to the First-tier Tribunal. ADR is available if HMRC agrees, but he should not rely on it to extend the deadline.
To avoid paying the disputed tax now, he applies in writing to HMRC to postpone £8,000, stating that amount and his reasons.
The undisputed £4,000 is payable on the normal due date.

Answer: Appeal in writing within 30 days of 10 March and apply in writing to postpone the disputed £8,000. Pay the undisputed £4,000 on time. If HMRC refuses postponement, the tribunal can decide.

Example 2

Following the appeal in the previous example, the tribunal finds the full £8,000 of postponed tax was due. It is paid six months after its original due date. Using the interest rate on underpaid tax in the ACCA tax tables, calculate the interest. Ignore penalties.

Show the solution

The rate on underpaid tax is 8·50%.
Interest runs from the original due date, so the months late are 6.
Interest = £8,000 × 8·50% × 6 ÷ 12.
£8,000 × 8·50% = £680 for a full year.
£680 × 6 ÷ 12 = £340.

Answer: Interest of £340 is payable on the £8,000, even though payment was postponed.

Exam tips

Write the 30-day appeal limit and the word 'written' in every answer on appeals.
Keep ADR, review and tribunal apart. ADR is voluntary and independent, a review is by a different HMRC officer, and a tribunal is independent of HMRC.
In calculations, split the tax into disputed and undisputed parts first, then apply the 8·50% rate to the part that was late.
In a Section C answer, give a short reasoned conclusion on which route to use and whether to apply for postponement, not only a list of rules.
In objective test questions, watch for absolute words such as 'must' or 'automatically' about ADR or postponement. These are usually wrong.

Practice questions from The procedures relating to compliance checks, appeals and disputes

Alternative Dispute Resolution and Postponement of Tax in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Alternative Dispute Resolution and Postponement of Tax: frequently asked questions

What is alternative dispute resolution with HMRC?

It is a voluntary process in which an HMRC-trained mediator, independent of the case team, helps you and HMRC settle a disagreement. It is used before or alongside the formal appeal routes. Both sides must agree to take part.

Does ADR stop me going to the tribunal?

No. ADR does not remove your right to an internal review or a tribunal appeal. If it fails, you can still follow those routes, but watch the 30-day appeal limit.

What is the difference between an HMRC internal review and a tribunal appeal?

An internal review is a fresh look by an HMRC officer who was not involved in the original decision. A tribunal appeal goes to the First-tier Tribunal, which is independent of HMRC. You can use either route for a decision, and you can still go to the tribunal if you disagree with the review.

How do I postpone tax pending an appeal?

Apply to HMRC in writing, stating the amount you believe is overcharged and why. Only the disputed amount can be postponed. If HMRC refuses, the tribunal can decide.

Is interest charged on postponed tax?

If the postponed tax is finally found to be due, interest on underpaid tax runs from the original due date. The ACCA tax tables give an assumed rate of 8·50%.