There has been a dramatic increase in the amount of disputed tax collected by HMRC through mediation, according to research by law firm RPC.

According to RPC, £40.8 million was collected through mediation for the year ending 31 March 2018, compared to £25.2 million for in 2016/17 – a 62% increase. RPC also revealed that there were 455 successful uses of alternative dispute resolution in 2017/18, which was up 23% on the previous year.

The increasing use of alternative resolutions should be advantageous to both HMRC and taxpayers as it means fewer cases have to go through expensive and time-consuming legal processes. It also aligns with HMRC’s mission to increase tax compliance generally and increase revenues for the Exchequer.

HMRC’s engagement with mediation methods can offer several advantages to those caught in a tax dispute:

• It speeds things up – legal processes are traditionally slow, especially when compared to direct negotiations.
• It’s cheaper – As neither side has to commit time or legal resources to a court case, the costs should be much lower than more formal routes. This is certainly a win for HMRC and should be a win for taxpayers as well.
• It is confidential – There can be great value in keeping the dispute private, and out of the court records.
• It is more flexible – Assuming HMRC and a disputing taxpayer can reach an agreement, it should be possible to put even long-running disputes to rest.

It is true that the better option is to ensure tax is paid correctly and on time. But if you are in dispute with HRMC, and would like some advice on how mediation could help you, please get in touch.