ADRG02600 | Negotiation and the HMRC Litigation and Settlement Strategy

The mediator will help both sides identify any areas of disputed fact, while helping to identify areas where compromise may be appropriate. In doing this the mediator may well challenge both parties on the strength of their positions and ask them to consider how their case would fare in a Tribunal.

Negotiation does not mean compromising on an issue just to reach an agreement. The sides are encouraged to read the “HMRC Litigation and Settlement Strategy” before the mediation meeting: this will help them understand the clear ground rules that HMRC follows when trying to reach a negotiated settlement with a customer.

For example, that guidance says that:

• HMRC will not settle an issue just to avoid costs where HMRC believes tax is properly due and payable. Tax disputes must, in all cases, be resolved in accordance with the law.

• Where there is more than one dispute between a customer and HMRC, each dispute must be considered and resolved on its own merits, not as part of any overall ‘package deal’

• In most cases, resolution by agreement is likely to offer the most effective and efficient outcome. However, HMRC will not compromise on its view of the law to secure agreement, and in that context, there will be cases where litigation offers the most effective and efficient means of resolution.

• Where there is a range of possible figures for tax due, HMRC will not settle by an agreement for an amount which is less than it would reasonably expect to obtain from litigation.

The Litigation and Settlement Strategy can be found here.