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

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

ADR in a dispute with HMRC is a voluntary process in which a trained facilitator, not previously involved in the case, helps HMRC and the taxpayer reach a settlement. It is not compulsory and is not used only after the tribunal has ruled.

  1. AHMRC will only consider ADR after the First-tier Tribunal has given its decision
  2. BADR uses a trained HMRC facilitator who has not been involved in the dispute to help both sides reach agreementCorrect
  3. CADR is compulsory before any appeal can be sent to the tribunal
  4. DA decision reached through ADR is legally binding on HMRC but can be appealed by the taxpayer to the tribunal

Explanation

ADR is a voluntary process used to try to settle a dispute, with a trained HMRC mediator who has had no previous involvement in the case helping both sides. It is not compulsory, and it is used before or during the appeal process, not after the tribunal decides. The suggestion that the outcome can be re-appealed is wrong because an agreed settlement is final.

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