HMRC rewrites ADR suitability test around value, not case type

HMRC will not take a dispute into Alternative Dispute Resolution where the matter is under criminal investigationGOV or where the case is stood behind a lead caseGOV. Those two bars are absolute: a dispute that falls under either one is unsuitable for ADR, whatever its subject matterGOV.

Complaints about HMRC are also outside ADR, with one exception. Where a complaint sits alongside a genuine underlying tax dispute and mediation would add value, HMRC may still consider the application.GOV A bare complaint about service or delay, with no underlying dispute to resolve, stays out.

The rewritten rules then apply an efficiency test. ADR must be likely to resolve the matter more efficiently and cost-effectively than other routes. Self-assessment registration matters, PAYE coding notices, automatic penalties for late filing and late payment, and tribunal appeals allocated to the basic or default paper category are given as examples of matters that will generally fail this test.GOV Taxpayers in these categories are instead pointed at challenging HMRC's decision or at the complaints process: GOV.UK guidance on disagreeing with a tax decision or complaining about HMRC.

A further bar covers cases where ADR would not add value or move the dispute towards resolution, for example where one side is unwilling to resolve the dispute through mediation.GOV And where litigation would usefully clarify a point of legal interpretation, or where the risk spans multiple customers, HMRC prefers the courtsGOV — though mediation can still help with customer-specific issues, for example gathering information so the full facts and technical positions are understood.

Conversely, a settled legal position does not keep a dispute out of ADR.GOV Where both parties want to resolve the dispute, mediation can still add value even though the underlying tax position is well established. The rules single out customers who are unrepresented or need extra support and feel they have not been listened to: ADR gives both sides a chance to clarify the situation and work together towards resolution.

The itemised exclusions that previously decided suitability no longer appear as standalone bars.GOV Debt recovery and payment issues, tax credits, default surcharges, Extra-Statutory Concessions, pension liberation schemes, High Income Child Benefit charges, National Minimum Wage disputes, accelerated payments and follower notices, Civil Evasion Penalties and forfeiture were each named as excluded; under the rewritten test, a dispute of any of those types stands or falls on the new principles — criminal investigation, lead case, complaint, efficiency, added value and litigation benefitGOV.

The suitability test sits in HMRC's Alternative Dispute Resolution guidance, Types of disputes not suitable for ADR (ADRG02900).