Resolving tax disputes: alternative dispute resolution - EYFILE/EY-… · Has worked on more cases...

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Tax Services The dispute is factual rather than technical and there is likely to be a range of possible outcomes Positions have become entrenched on an apparently ‘all or nothing’ technical issue but there is scope to explore potential alternative technical analyses The nature of the particular issue means that litigation is unlikely to offer a cost effective/efficient resolution to the dispute (e.g., fact specific or limited precedent value) There is uncertainty over the facts and/or which facts are relevant Resolving tax disputes: alternative dispute resolution F u r ther informatio n Please contact one of the following members of our team if you want to discuss this opportunity further: Jim Wilson T: + 44 20 7951 5912 E: [email protected] Geoff Lloyd T: + 44 20 7951 8736 E: [email protected] Paul Dennis T: + 44 121 535 2611 E: [email protected] New process to resolve tax disputes in a more efficient and cost effective manner Background In early 2011 HMRC launched a pilot to explore whether alternative dispute resolution (ADR) — in particular the appointment of a third-party mediator — could be used to help resolve tax disputes. In many cases it was thought that ADR could help facilitate the agreement of settlements in long running disputes where progress had stalled or which were otherwise heading towards litigation. Having identified appropriate cases the ADR process provided a focus on resolving the disputes with5 in a relatively short period of time, thereby offering significant cost and time savings for all parties, as well as the benefit of earlier certainty. The ADR pilot has been considered to be a huge success by HMRC and clients alike and HMRC is now seeking to roll out ADR more widely. There is, therefore, now an opportunity to engage with HMRC to seek to resolve ongoing tax disputes (in relation to any tax or duty) through a streamlined process that is extremely efficient and cost effective. Cases potentially suitable for ADR The types of dispute that could benefit from ADR include those where; There is a lack of clarity/understanding regarding the parties' respective technical positions Attempts to work collaboratively/agree a resolution have stalled and a facilitated process may help the parties to improve the way they work together to try to resolve the dispute

Transcript of Resolving tax disputes: alternative dispute resolution - EYFILE/EY-… · Has worked on more cases...

Page 1: Resolving tax disputes: alternative dispute resolution - EYFILE/EY-… · Has worked on more cases in the ADR pilot than any other advisor Includes Geoff Lloyd, the former head of

Tax Services

► The dispute is factual rather than technical and there is likely to be a range of possible outcomes

► Positions have become entrenched on an apparently ‘all or nothing’ technical issue but there is scope to explore potential alternative technical analyses

► The nature of the particular issue means that litigation is unlikely to offer a cost effective/efficient resolution to the dispute (e.g., fact specific or limited precedent value)

► There is uncertainty over the facts and/or which facts are relevant

Resolving tax disputes: alternative dispute resolution

Further informationPlease contact one of thefollowing members of ourteam if you want to discussthis opportunity further:

Jim Wilson

T: + 44 20 7951 5912E: [email protected]

Geoff Lloyd

T: + 44 20 7951 8736E: [email protected]

Paul Dennis

T: + 44 121 535 2611E: [email protected]

New process to resolve tax disputes in a more efficient and costeffective manner

BackgroundIn early 2011 HMRC launched a pilot to explore whether alternative dispute resolution (ADR) — inparticular the appointment of a third-party mediator — could be used to help resolve tax disputes.In many cases it was thought that ADR could help facilitate the agreement of settlements in longrunning disputes where progress had stalled or which were otherwise heading towards litigation.Having identified appropriate cases the ADR process provided a focus on resolving the disputes with5in a relatively short period of time, thereby offering significant cost and time savings for all parties,as well as the benefit of earlier certainty.

The ADR pilot has been considered to be a huge success by HMRC and clients alike and HMRC is nowseeking to roll out ADR more widely. There is, therefore, now an opportunity to engage with HMRCto seek to resolve ongoing tax disputes (in relation to any tax or duty) through a streamlined processthat is extremely efficient and cost effective.

Cases potentially suitable for ADRThe types of dispute that could benefit from ADR include those where;

► There is a lack of clarity/understanding regarding the parties' respective technical positions

► Attempts to work collaboratively/agree a resolution have stalled and a facilitated process may helpthe parties to improve the way they work together to try to resolve the dispute

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► Has worked on more cases in the ADR pilot than any other advisor

► Includes Geoff Lloyd, the former head of HMRC’s Dispute Resolution Unit, who was responsible for introducing and piloting ADR for tax in the UK

► Includes a director who was seconded to HMRC for nine months to manage the ADR pilot and who wrote the internal guidance on ADR for HMRC staff

► Has trained, accredited mediators who can give first hand and practical insights into how a mediation works

If you have an ongoing tax dispute for which you could potentially benefit from being included in an ADR process, EY would be happy to discuss with you the opportunities and options available to resolve the dispute outside of litigation.

“ The key to resolving the dispute was a shift in focus and behaviours of both parties. The ADR process provided a forum for the parties to openly explore the issue and work together to reach a conclusion that was acceptable to both HMRC and the client. As well as resolving a significant longstanding issue, the ADR process has also laid the foundations for a much improved working relationship with HMRC going forward.”

Paul Dennis EY

► A streamlined process which means long running disputes can be resolved in a short period of time (typically three to six months), achieving time and cost savings for both parties

► It provides a process for helping the parties to clarify and, where possible, agree what facts are relevant to the dispute

► It can be completed in a short period of time, without adversely impacting the timetable for any subsequent litigation (if an agreement cannot be reached)

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Benefits of ADRBased on EY’s experience to date, the benefits that ADR can bringto ongoing tax disputes include;

► It helps to bring certainty earlier, allowing provisions to bereleased and tax repayments to be freed up

► It provides momentum and a fresh impetus to discussions,particularly in cases where existing dialogue may have stalled, orreached an impasse, or where relationships have deteriorated

► It refocuses all parties on resolution; parties can work togetherwith a view to exploring possible outcomes, identifying/co-developing potential solutions and, ultimately, agreeing ac-ceptable bases for resolving long running disputes

► It helps the parties to get a better understanding of theother side’s technical arguments and provides a process forexploring technical points with stakeholders from both sides(e.g., HMRC policy)

► Even where the parties may not be able to reach an agreedresolution the ADR process can help to improve the efficiencyof any subsequent litigation (e.g., by clarifying/agreeing thefacts and narrowing the dispute to the key issues needed to betested at Tribunal)

How EY can helpEY has unparalleled experience of the ADR process. In particular,the EY team;

Case studyA company had a major VAT dispute with HMRC. This hadbeen running since 2004. The issue stemmed from a complexvaluation point which fed into the output tax calculation. Itwas accepted by the parties that it was extremely difficult toobtain a correct answer on the issue but, whilst the technicaltreatment was not in doubt, the valuation point could notbe agreed. Progress had stalled and, despite having alreadybeen to the Tribunal on the issue, the parties were unable toreach agreement.

At the beginning of 2011 EY became involved in the caseand was able to secure HMRC’s agreement that the casewas suitable for ADR. Within six months, having workedcollaboratively together throughout the process, EY, the cli-ent, and HMRC, were able to agree a settlement of the issueto the mutual satisfaction of all parties, together with a meth-odology for the future to prevent the dispute arising again.

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