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HM Revenue & Customs' Alternative Dispute Resolution Service for SMEs and Individuals deals with some very modest amounts, notes TaxationWeb.

Firstly, a big "Thank You" to Don Draper for last week's Guest Editorial and for his accompanying article which highlighted the frankly appalling effective marginal rates of tax that some (roughly 2 million) families are facing - and which will worsen next year when Universal Credit is introduced.

To quote from the article Income Tax Needs to take the Family into Account, "People worry about the disincentive effect which a 50% marginal tax rate has on those with very high incomes. What do we suppose is the disincentive effect on the 2 million families who next year will be paying 76%?" Indeed. Perhaps "people" were too busy trashing Child Benefit to notice.

But moving on to more positive matters, I chanced to speak to HM Revenue & Customs a few days ago about the Alternative Dispute Resolution Trial for Small and Medium Enterprise and Individual Customers. The trials for this mediation service have been going on for well over a year and I had previously heard some conflicting information and was pleased to hear details from the horse's mouth - and even more so that the outcomes were so positive.

One might assume (I certainly did) that these cases usually involve large amounts of tax and technically obtuse matters. I am assured that this is not so. To get a sense of perspective, the average amount of tax 'in dispute' for the first stage of the ADR pilot was around £11,000, with the smallest amount being just £700. Furthermore, HMRC reckons that the first stage was 60% successful - i.e., agreement by both parties - over all of the cases taken.

ADR as a regime will be in the pilot phase for some time yet but it is clear that HMRC is "hopeful". ADR will not be suitable for every dispute but based on these early findings, if a taxpayer has a more than even chance of a satisfactory resolution - without the cost of formal proceedings - then in principle so am I.

Regards all,

TW Ed