Taxpayers who have found themselves locked in dispute with the HMRC now have the opportunity to settle their affairs using a new one-day ‘quick fix’. The new scheme looks to fast-track aggravated taxpayers through to a hearing with the view of settlement within a day.
The hearing involves a mediator, typically an HMRC employee or an independent third party, who listens to the issues from both sides in an attempt to reach a settlement by the end of the day.
The new scheme, called ‘alternative dispute resolution’ was rather quietly rolled out by HMRC at the end of 2013 after a two-year trial. The scheme is available to all taxpayers, however it is more aimed towards small-business owners or wealthy individuals who are more likely to face large tax bills they disagree with.
The idea behind it is to help ease the strain on a tribunal system that is overloaded with claims. According to Fiona Fernie, a tax investigations partner at accountancy firm BDO, it takes an average of 70 weeks before taxpayers even get a hearing.
“This is locking up billions of pounds in uncollected tax, so it makes sense that the Revenue is pushing individuals towards the one-day hearings.
“But from the individual’s perspective the one-day quick fix is also desirable. In a way, individuals have got nothing to lose trying to get their tax bill down. If a settlement cannot be brokered, it will just go to a tribunal at a later date.”
Other tax experts warn that the scheme has its flaws, one of which is that so far only one in two cases actually get settled in one day, with the HMRC tending to drag their heels when it comes to the larger, more complex cases.
A spokesman for HMRC has commented to say that the scheme is getting more and more popular with taxpayers liking the speed of the process and the chance to avoid long-winded tribunals.