Given the proven success of Alternative Dispute Resolution (ADR) mediation in resolving disputes between HMRC and taxpayers, Barbara Bento, Buzzacott’s CEDR Accredited Mediator, offers her top 10 ADR tips for the taxpayer and you, their legal representative.

1. Appoint a trusted and accredited mediator

The success or failure of mediation often depends on the calibre of the mediator. In addition to the mediator that will be provided by HMRC, the taxpayer can engage their own facilitator, and by doing so, increase their chance of success.

2. Preparation

Just as in litigation, preparation is key for a successful outcome. Ensure the taxpayer has a good understanding of the facts and the legislation so they are seen as negotiating from a position of strength. Prepare by having pre-mediation meetings to ensure your client is fully aware of the process and what to expect on the mediation day.

3. Mindset

HMRC, your client, and the mediator(s) must demonstrate flexibility, patience and a willingness to persevere. It is often the case that settlement agreements are reached when least expected and after many hours of deadlock. Taxpayers must resist the temptation to make impulsive decisions or offers.

4. Set aside sufficient time

It’s important to come to mediation with an open mind and accept that it‘s likely to take longer than envisaged, regardless of how confident your party feels about the case and opening position. While I, as an Accredited Mediator, have had cases that settled within a couple of hours, I have also had others that lasted a whole day.

5. Set the tone with your opening statement

If your client wishes to make an opening statement, this would be the ideal opportunity to set the tone and get their position and view of facts and circumstances across - particularly if the dispute has affected them personally. However, be mindful that hostile and overly passionate opening statements can backfire by resulting in parties becoming entrenched in their own positions too early in the day.I consider that opening statements that are realistic, unbiased and succinct are more conducive to a successful mediation.

6. Make timely and realistic offers

It is often the case that parties come to mediation with extreme positions and unrealistic offers. While this does leave plenty of room to negotiate, such positions and offers should be avoided given it can divide both sides from the start. The timing and quantum of the offer is important and it should be strategically considered before entering the mediation room. The sooner the bargaining stage of mediation is reached, the better.

7. Be objective and realistic

When dealing with emotions, remaining objective can be challenging. A good mediator will act as a reality check by challenging both HMRC and the taxpayer on their positions. However, you and your client should also realistically assess the strengths of the case and work out the most likely outcome.

This will often fall between the best and worst case scenarios. This technique could be used to identify the range in which your client would be comfortable to settle.

8. Take breaks and make the most of private meetings

A break or a private meeting with the mediators is an opportunity to test positions, to re-evaluate, to recap and reflect. These are very helpful, especially in situations of deadlock or when HMRC or your client appear to become frustrated or tired.

9. Authority to make decisions

Ensure that the HMRC attendees have unlimited discretion to make a decision and ultimately settle the dispute.

10. Leave with a clear Record of Outcome (the agreement)

The Record of Outcome should accurately reflect the terms agreed, to ensure parties know exactly how matters will then proceed. It should be signed and dated by or on behalf of HMRC and you/your client.

How can we help?

We have extensive experience in assisting clients in dispute with HMRC and in particular, mediating through the ADR process. We provide a discreet and comprehensive mediation and litigation service that is tailored to meet your unique needs and protect your interests.