HMRC's new dispute resolution service would instil more confidence if the facilitators were independent, says Socrates Socratous.

Only time will tell if HMRC's new Alternative Dispute Resolution (ADR) service is useful.

Much will depend on whether the facilitators are truly independent and give unbiased guidance/comment to a dispute, or whether they take the side of HMRC. At the moment, once an officer has reached a decision on a matter, the taxpayer can ask for a review of the decision by an officer who has not been involved in the decision. However, our experience and that of many others is that the review officer will uphold the decision of the original officer. Similarly, it is not unknown for the review officer to liaise with the decision-making officer, thus bringing into question whether the review is truly independent.

Whether this new pilot will be any better remains to be seen. The theory sounds fine, but would HMRC really invest time and effort if the net result is less assessments?

The overarching problem for small taxpayers is that HMRC knows full well that if an assessment of anything up to £30,000 is issued, most taxpayers will not now fight it in the Tribunal because even if they win, they do not receive reimbursement of costs and hence are still out of pocket – unlike the historic position. In my opinion, this fundamental change to the Tribunal appeals process does no favours to small businesses as HMRC has a clear advantage.

Having said this, the theory sounds fine but the jury is out, pending how HMRC operates ADR. I would have felt more comfortable with the proposals if the facilitators were independent of HMRC and had received relevant training to consider VAT matters.

Socrates Socratous is director at SOC VAT Consultants