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

Which of the following statements about alternative dispute resolution (ADR) in a dispute with HM Revenue and Customs (HMRC) is correct?

ADR is a voluntary process where an HMRC facilitator, independent of the original decision, helps HMRC and the taxpayer reach agreement. It is not compulsory before appealing, and it does not impose a binding decision. It is an informal route to settle disputes without a tribunal hearing.

  1. AADR is a mediation-style process that is available only after the taxpayer has first appealed to the First-tier Tribunal
  2. BADR must be used by a taxpayer before any appeal can be made against an HMRC decision
  3. CADR is a voluntary process in which an HMRC facilitator who was not involved in the original decision helps both sides to reach agreementCorrect
  4. DADR produces a binding decision that the taxpayer cannot then challenge at the tribunal

Explanation

ADR is voluntary and uses an HMRC facilitator who was not involved in the original dispute to help both parties settle. It is not a precondition to appealing and does not need an appeal to the tribunal first. Option D is wrong because ADR does not impose a decision; it only helps reach a settlement that both sides accept.

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