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HMRC Tax AppealsUnited Kingdom
Free HMRC Alternative Dispute Resolution (ADR) Request Letter Template
An HMRC Alternative Dispute Resolution (ADR) request is the formal taxpayer application to HMRC's ADR team for mediation of a live United Kingdom tax dispute. ADR is HMRC's mainstream mediation route since the pilot scheme ended in 2014 — the 2024/25 published statistics recorded an 88.7 per cent positive-outcome rate, with 90 per cent of cases resolved within 120 days. Use our free UK template to apply for ADR under the published HMRC ADR guidance and the Litigation and Settlement Strategy (LSS) 2017 framework — operating alongside the statutory appeal route under section 49 of the Taxes Management Act 1970.
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HMRC Alternative Dispute Resolution — Request for ADR Mediation
Application To The HMRC ADR Team Under The Published HMRC ADR Guidance And Litigation And Settlement Strategy Framework · 22 May 2026
Northbridge Innovations Limited
5 Atlas Court, Manchester M15 4RF
0161 555 8841
finance@northbridgeinnovations.co.uk
22 May 2026
HMRC Alternative Dispute Resolution Team
HMRC ADR Team, HM Revenue and Customs, BX9 1ZB, United Kingdom
REQUEST FOR ALTERNATIVE DISPUTE RESOLUTION (ADR)
HMRC Ref: WMBC-NBI-2026-01874 | UTR: 7733110044
Dear ADR Team,
I write on behalf of Northbridge Innovations Limited (UTR 7733110044), VAT registration GB 332 4471 18 to apply for Alternative Dispute Resolution under the published HMRC ADR guidance. The dispute concerns Research and Development tax credits / relief for the period Corporation tax accounting periods ending 31 March 2023 and 31 March 2024, with an amount in dispute of £412,800 (RandD tax credit claim under challenge). The dispute is at the procedural stage of assessment / closure notice issued; appeal not yet lodged, being handled by Marcus Hartley (Wealthy and Mid-sized Business Compliance, Manchester). The nature of the dispute is best characterised as status / relief eligibility (RandD / BPR / APR / Entrepreneurs' Relief etc.) and the taxpayer's preferred mediator approach is the joint LSS-mediator (HMRC + independent mediator). The reasoned ADR application set out below explains why the dispute is suitable for ADR under the Litigation and Settlement Strategy framework and proposes the next procedural steps.
I write on behalf of Northbridge Innovations Limited (UTR 7733110044), VAT registration GB 332 4471 18 to apply for Alternative Dispute Resolution under the published HMRC ADR guidance. The dispute concerns Research and Development tax credits / relief for the period Corporation tax accounting periods ending 31 March 2023 and 31 March 2024, with an amount in dispute of £412,800 (RandD tax credit claim under challenge). The dispute is at the procedural stage of assessment / closure notice issued; appeal not yet lodged, being handled by Marcus Hartley (Wealthy and Mid-sized Business Compliance, Manchester). The nature of the dispute is best characterised as status / relief eligibility (RandD / BPR / APR / Entrepreneurs' Relief etc.) and the taxpayer's preferred mediator approach is the joint LSS-mediator (HMRC + independent mediator). The reasoned ADR application set out below explains why the dispute is suitable for ADR under the Litigation and Settlement Strategy framework and proposes the next procedural steps.
1.
TAXPAYER AND AGENT IDENTIFICATION
Taxpayer: Northbridge Innovations Limited
Correspondence address: 5 Atlas Court, Manchester M15 4RF
UTR: 7733110044
VAT registration: GB 332 4471 18
Telephone: 0161 555 8841
Email: finance@northbridgeinnovations.co.uk
Agent: Pemberton Tax Advisers LLP (agent reference PTA/NBI/2026/0912)
Agent address: 23 Brazennose Street, Manchester M2 5BP
Correspondence address: 5 Atlas Court, Manchester M15 4RF
UTR: 7733110044
VAT registration: GB 332 4471 18
Telephone: 0161 555 8841
Email: finance@northbridgeinnovations.co.uk
Agent: Pemberton Tax Advisers LLP (agent reference PTA/NBI/2026/0912)
Agent address: 23 Brazennose Street, Manchester M2 5BP
2.
DISPUTE SUMMARY
Tax type: Research and Development tax credits / relief
Period concerned: Corporation tax accounting periods ending 31 March 2023 and 31 March 2024
Amount in dispute: £412,800 (RandD tax credit claim under challenge)
HMRC officer: Marcus Hartley
HMRC office: Wealthy and Mid-sized Business Compliance, Manchester
HMRC reference: WMBC-NBI-2026-01874
Nature of the dispute: status / relief eligibility (RandD / BPR / APR / Entrepreneurs' Relief etc.)
Period concerned: Corporation tax accounting periods ending 31 March 2023 and 31 March 2024
Amount in dispute: £412,800 (RandD tax credit claim under challenge)
HMRC officer: Marcus Hartley
HMRC office: Wealthy and Mid-sized Business Compliance, Manchester
HMRC reference: WMBC-NBI-2026-01874
Nature of the dispute: status / relief eligibility (RandD / BPR / APR / Entrepreneurs' Relief etc.)
3.
PROCEDURAL STAGE
Current stage: assessment / closure notice issued; appeal not yet lodged
Procedural detail:
The compliance enquiry into the RandD tax credit claims opened on 14 March 2025 and is now closed; HMRC issued a closure notice on 9 April 2026 disallowing the RandD tax credit claims for both accounting periods. The 30-day window to appeal the closure notice runs to 9 May 2026. An appeal has been lodged with HMRC on a protective basis on 6 May 2026. The taxpayer wishes ADR to run in parallel with the procedural appeal so that the substantive RandD-relief question can be mediated before the appeal is progressed.
Procedural detail:
The compliance enquiry into the RandD tax credit claims opened on 14 March 2025 and is now closed; HMRC issued a closure notice on 9 April 2026 disallowing the RandD tax credit claims for both accounting periods. The 30-day window to appeal the closure notice runs to 9 May 2026. An appeal has been lodged with HMRC on a protective basis on 6 May 2026. The taxpayer wishes ADR to run in parallel with the procedural appeal so that the substantive RandD-relief question can be mediated before the appeal is progressed.
4.
WHY ADR AND PREFERRED MEDIATOR APPROACH
Preferred mediator approach: joint LSS-mediator (HMRC + independent mediator)
Brief reason for ADR:
The dispute turns on the technological-advance / technological-uncertainty test for RandD relief eligibility (CTA 2009 ss.1138-1140). The substantive question is whether the taxpayer's neural-network compiler optimisation project meets the BEIS Guidelines on the Meaning of RandD for Tax Purposes (2023 update). The dispute is factually intensive — the parties disagree on what a competent professional in the field would have known at the project start, not on the legal test. ADR is well-suited because (i) the issues are factually intensive; (ii) a domain-expert facilitator can narrow the technological factual matrix; (iii) a settlement within the legal range is plausible; (iv) tribunal-cost avoidance is significant for both parties.
Brief reason for ADR:
The dispute turns on the technological-advance / technological-uncertainty test for RandD relief eligibility (CTA 2009 ss.1138-1140). The substantive question is whether the taxpayer's neural-network compiler optimisation project meets the BEIS Guidelines on the Meaning of RandD for Tax Purposes (2023 update). The dispute is factually intensive — the parties disagree on what a competent professional in the field would have known at the project start, not on the legal test. ADR is well-suited because (i) the issues are factually intensive; (ii) a domain-expert facilitator can narrow the technological factual matrix; (iii) a settlement within the legal range is plausible; (iv) tribunal-cost avoidance is significant for both parties.
5.
LITIGATION AND SETTLEMENT STRATEGY — 2017 FRAMEWORK APPLICATION
The HMRC Litigation and Settlement Strategy (LSS), refreshed in 2017, is the framework governing how HMRC handles disputes whether they are resolved through agreement or litigation. The LSS commits HMRC to resolve matters in a way that is consistent with the law, even-handed across taxpayers, in line with the HMRC Charter and proportionate. ADR sits alongside the statutory appeal route under section 49 of the Taxes Management Act 1970 and the internal-review route under section 49A of the same Act — it is not a substitute for either but a parallel mediation route. The taxpayer's position is that the LSS framework supports ADR for this dispute because the underlying issues are amenable to mediation, settlement within the legal range is feasible, and the tribunal-cost avoidance benefits both parties.
LSS paragraph relied on:
The taxpayer relies on the LSS 2017 even-handedness principle (LSS para 3) — RandD-relief disputes are increasingly common and HMRC has the opportunity to develop a consistent factual-evaluation framework through ADR. The LSS proportionality principle (LSS para 5) supports ADR where the cost of FTT preparation exceeds the marginal benefit of full hearing — on the £412,800 quantum, the FTT cost-to-quantum ratio is heavily skewed in favour of mediated resolution.
Tribunal-cost avoidance argument:
Estimated tribunal-route costs: agent preparation and bundle assembly £45,000-65,000; expert witness (Professor of Computer Science, University of Manchester) preparation and report £25,000-40,000; FTT hearing 3-5 days at agent rate £35,000-55,000; further preparation for any Upper Tribunal appeal £25,000-45,000. Total estimated tribunal-route cost £130,000-205,000 against £412,800 quantum (cost-to-quantum ratio 31-50 per cent). Estimated ADR-route cost £20,000-35,000 (mediator time, agent preparation, expert technical brief).
LSS paragraph relied on:
The taxpayer relies on the LSS 2017 even-handedness principle (LSS para 3) — RandD-relief disputes are increasingly common and HMRC has the opportunity to develop a consistent factual-evaluation framework through ADR. The LSS proportionality principle (LSS para 5) supports ADR where the cost of FTT preparation exceeds the marginal benefit of full hearing — on the £412,800 quantum, the FTT cost-to-quantum ratio is heavily skewed in favour of mediated resolution.
Tribunal-cost avoidance argument:
Estimated tribunal-route costs: agent preparation and bundle assembly £45,000-65,000; expert witness (Professor of Computer Science, University of Manchester) preparation and report £25,000-40,000; FTT hearing 3-5 days at agent rate £35,000-55,000; further preparation for any Upper Tribunal appeal £25,000-45,000. Total estimated tribunal-route cost £130,000-205,000 against £412,800 quantum (cost-to-quantum ratio 31-50 per cent). Estimated ADR-route cost £20,000-35,000 (mediator time, agent preparation, expert technical brief).
6.
SETTLEMENT SCOPE — TOWER MCASHBACK + CLOSURE NOTICE ANCHOR
The Supreme Court in Tower MCashback v HMRC [2011] UKSC 19 confirmed that the closure notice anchors the issues open to the appeal: the parties may negotiate a settlement within the scope of the issues actually open on the closure notice, but not outside it. The Upper Tribunal in Eclipse Film Partners v HMRC [2016] UKUT 28 reinforced the scope-control function of the closure notice. ADR mediation should respect the closure-notice scope; the application here is for a mediated outcome that resolves the issues actually open. The European Court of Justice authority in Halifax v Customs and Excise [2006] ECJ C-255/02 sets the abuse-of-right outer limit — settlement cannot validate an abusive arrangement.
Closure-notice anchor on the present dispute:
The closure notice issued on 9 April 2026 disallows the RandD tax credit claims for both accounting periods on the ground that the claimed activities do not constitute RandD within the meaning of the BEIS Guidelines. The closure notice expressly identifies four sub-projects within the parent claim — Project Alpha (neural-network compiler), Project Beta (memory-allocation optimisation), Project Gamma (deep-learning inference engine) and Project Delta (model-quantisation framework). The Tower MCashback scope of the appeal is confined to those four sub-projects and to the technological-advance / technological-uncertainty test for each.
Scope limits applied to the ADR request:
The taxpayer confirms that the ADR mediation will respect the closure-notice scope and will not extend to (i) any future RandD claim outside the two accounting periods under appeal; (ii) the eligibility of any sub-project not identified in the closure notice; (iii) any penalty enquiry separately raised under FA 2007 Schedule 24 (no such penalty is in play); (iv) any Halifax abuse-of-right point (HMRC has not raised one).
Closure-notice anchor on the present dispute:
The closure notice issued on 9 April 2026 disallows the RandD tax credit claims for both accounting periods on the ground that the claimed activities do not constitute RandD within the meaning of the BEIS Guidelines. The closure notice expressly identifies four sub-projects within the parent claim — Project Alpha (neural-network compiler), Project Beta (memory-allocation optimisation), Project Gamma (deep-learning inference engine) and Project Delta (model-quantisation framework). The Tower MCashback scope of the appeal is confined to those four sub-projects and to the technological-advance / technological-uncertainty test for each.
Scope limits applied to the ADR request:
The taxpayer confirms that the ADR mediation will respect the closure-notice scope and will not extend to (i) any future RandD claim outside the two accounting periods under appeal; (ii) the eligibility of any sub-project not identified in the closure notice; (iii) any penalty enquiry separately raised under FA 2007 Schedule 24 (no such penalty is in play); (iv) any Halifax abuse-of-right point (HMRC has not raised one).
7.
HMRC CHARTER COMPLIANCE AND THE REASONABLE-ADVISER STANDARD
The HMRC Charter sets out duties of fairness, even-handedness and proportionality. Taxpayers and their advisers are entitled to expect HMRC to apply the Charter consistently across cases. ADR allows the Charter framework to be applied face-to-face: the mediator can hear the taxpayer's reasonable-adviser position on the facts, weigh the HMRC officer's tax-technical view, and reach a Charter-compliant outcome that respects the LSS framework. Where penalties are bundled with the assessment under appeal, the limits of HMRC fairness jurisdiction under HMRC v Hok Ltd [2012] UKUT 363 (TCC) must be respected — but ADR can still address the substantive tax dispute under the closure notice.
Charter fairness argument on the present dispute:
The HMRC Charter fairness duty supports ADR for this dispute. The taxpayer engaged Pemberton Tax Advisers LLP at the project initiation stage in 2022; obtained contemporaneous technical sign-off from an independent Reader in Computer Science at the University of Edinburgh; documented the technological-uncertainty narrative quarterly; and filed the RandD claim within the standard published HMRC guidance framework. A reasonable adviser standard applied to those facts produces a RandD-eligibility conclusion that the closure notice does not reflect. ADR allows that reasonable-adviser position to be heard face-to-face by an HMRC-facilitated mediator.
Reasonable-adviser standard relied on:
The reasonable-adviser position rests on five contemporaneous documents that will be put before the mediator: (i) the Reader's technical sign-off letter dated 14 June 2022; (ii) the project-initiation memorandum identifying the technological uncertainty (memory-allocation pattern in heterogeneous compute environments); (iii) the quarterly project journals (12 quarterly entries across the two-year project period); (iv) the failed-experiment log (47 documented failed approaches); (v) the publication record (one peer-reviewed conference paper, two arXiv pre-prints).
Charter fairness argument on the present dispute:
The HMRC Charter fairness duty supports ADR for this dispute. The taxpayer engaged Pemberton Tax Advisers LLP at the project initiation stage in 2022; obtained contemporaneous technical sign-off from an independent Reader in Computer Science at the University of Edinburgh; documented the technological-uncertainty narrative quarterly; and filed the RandD claim within the standard published HMRC guidance framework. A reasonable adviser standard applied to those facts produces a RandD-eligibility conclusion that the closure notice does not reflect. ADR allows that reasonable-adviser position to be heard face-to-face by an HMRC-facilitated mediator.
Reasonable-adviser standard relied on:
The reasonable-adviser position rests on five contemporaneous documents that will be put before the mediator: (i) the Reader's technical sign-off letter dated 14 June 2022; (ii) the project-initiation memorandum identifying the technological uncertainty (memory-allocation pattern in heterogeneous compute environments); (iii) the quarterly project journals (12 quarterly entries across the two-year project period); (iv) the failed-experiment log (47 documented failed approaches); (v) the publication record (one peer-reviewed conference paper, two arXiv pre-prints).
8.
TRIBUNAL STAY ROUTE — FTT RULE 5(3)(J) STAY FOR ADR
Rule 5(3)(j) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) empowers the Tribunal to suspend proceedings to allow the parties to attempt ADR. Where an appeal has already been lodged, the parties can jointly apply to the FTT for a stay of the appeal pending ADR. The stay is normally granted on the parties' joint application and is typically for a defined period (commonly 90-120 days, aligned with the published HMRC ADR resolution target). Where the ADR mediation resolves the dispute, the appeal is withdrawn; where it does not, the appeal is restored to the FTT list with the benefit of any narrowed issues identified in mediation.
FTT case reference: FTT/TC/2026/01892 (protective appeal lodged 6 May 2026)
Stay proposal on the present appeal:
The taxpayer proposes a joint application to the FTT for a stay of the appeal under rule 5(3)(j) for a period of 120 days from acceptance of this ADR application, aligned with the published HMRC ADR resolution target. During the stay (i) ADR initiation within 14 days; (ii) first mediation session within 45 days; (iii) targeted resolution within 90 days; (iv) 30-day buffer for any documentary or expert follow-up. If the ADR mediation resolves the dispute, the appeal will be withdrawn; if it does not, the appeal will be restored to the FTT list with the benefit of the narrowed issues identified in mediation.
FTT case reference: FTT/TC/2026/01892 (protective appeal lodged 6 May 2026)
Stay proposal on the present appeal:
The taxpayer proposes a joint application to the FTT for a stay of the appeal under rule 5(3)(j) for a period of 120 days from acceptance of this ADR application, aligned with the published HMRC ADR resolution target. During the stay (i) ADR initiation within 14 days; (ii) first mediation session within 45 days; (iii) targeted resolution within 90 days; (iv) 30-day buffer for any documentary or expert follow-up. If the ADR mediation resolves the dispute, the appeal will be withdrawn; if it does not, the appeal will be restored to the FTT list with the benefit of the narrowed issues identified in mediation.
9.
REQUEST FOR ADR ACCEPTANCE
On the basis of the matters set out above, the taxpayer respectfully requests the HMRC ADR Team to accept this case for Alternative Dispute Resolution and to nominate a mediator under the joint LSS-mediator (HMRC + independent mediator) approach. The LSS framework, the Tower MCashback / closure-notice scope, the HMRC Charter fairness duty and (where applicable) the FTT rule 5 stay route are relied on individually and cumulatively. Please acknowledge receipt of this application and confirm the acceptance decision in writing as soon as possible. The taxpayer will hold any procedural steps on the underlying dispute in abeyance pending the ADR acceptance decision, subject to any statutory deadlines that cannot be paused.
YOURS FAITHFULLY,
Pemberton Tax Advisers LLP
Agent for Northbridge Innovations Limited
Date: ____________________
AGENT
Pemberton Tax Advisers LLP
Agent
Northbridge Innovations Limited
Date: ____________________
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What Is an HMRC ADR Request?
An HMRC ADR request is a written application to HMRC's ADR team for mediation of a live tax dispute. ADR sits alongside the statutory appeal route under section 49 of the Taxes Management Act 1970 and can be accessed before or after a tribunal appeal is lodged. The mediator is HMRC-trained (often an HMRC officer) but impartial as between the parties — joint LSS-mediator approach is available in larger cases. ADR is suitable for factual disputes, mixed factual / interpretation disputes and (within the LSS limits) some interpretation-only disputes.
The framework operates under HMRC's published ADR guidance (refreshed 2024) and the Litigation and Settlement Strategy (LSS) 2017 update. The LSS governs how HMRC handles disputes through agreement or litigation — settlement must be within the boundaries of the law, not on the basis of perceived prejudice or convenience. The First-tier Tribunal (Tax Chamber) has a case management power under rule 5(3)(j) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 to stay an appeal for ADR. The HMRC postal address for ADR correspondence in the United Kingdom is HMRC ADR Team, HM Revenue and Customs, BX9 1ZB.
Cases NOT suitable for ADR include avoidance schemes (HMRC's strategic view in the LSS); abuse of right (Halifax v Customs & Excise [2006] ECJ C-255/02); criminal investigations; and matters under formal Code of Practice 9 investigation. The Supreme Court in Tower MCashback v HMRC [2011] UKSC 19 confirms that the appeal scope versus negotiated settlement turns on the closure notice — the closure-notice anchors the issues open at the First-tier Tribunal and (by extension) the scope of any ADR settlement. The Upper Tribunal in Eclipse Film Partners v HMRC [2016] UKUT 28 develops the closure-notice scope point. The HMRC v Hok Ltd [2012] UKUT 363 (TCC) penalty fairness limitation is relevant where penalties are bundled with assessments in the ADR scope.
What's Covered in This Template
Our United Kingdom HMRC ADR request template builds a structured letter HMRC's ADR team can process quickly — taxpayer and agent identification, dispute summary, procedural stage, why ADR is suitable, preferred mediator approach and (in Expert sections) the LSS 2017 framework application, the Tower MCashback closure-notice scope, the HMRC Charter compliance and the FTT stay-for-ADR route.
HMRC ADR Team Postal Address (BX9 1ZB)
Pre-fills the standard HMRC ADR correspondence address — HMRC ADR Team, HM Revenue and Customs, BX9 1ZB, United Kingdom — used across the United Kingdom for ADR mediation requests.
Sender Role Switch — Taxpayer or 64-8 Agent
Adjusts the identification block to match the sender — direct application by the taxpayer or application via a 64-8-authorised tax agent (accountant, tax adviser or solicitor) on behalf of the British taxpayer.
Dispute-Type Switch — Direct Tax / VAT / Penalty / Mixed
Auto-adjusts the procedural framing depending on whether the dispute is a direct tax (Income Tax, Corporation Tax, CGT, IHT), VAT, a penalty bundle or a mixed-tax dispute. Each engages slightly different LSS considerations.
Procedural-Stage Switch
Pre-appeal (open enquiry / closure notice stage); post-appeal pre-tribunal (Notice of Appeal lodged with HMRC); FTT stayed for ADR (rule 5(3)(j) stay). ADR is available at each procedural stage.
Expert: LSS 2017 Framework Application
Applies the Litigation and Settlement Strategy 2017 update — settlement within the boundaries of the law, not on the basis of perceived prejudice or convenience. The expert section makes the LSS case for ADR suitability.
Expert: Tower MCashback Closure-Notice Scope
Engages the Supreme Court in Tower MCashback v HMRC [2011] UKSC 19 — the appeal scope versus negotiated settlement turns on the closure notice. The closure notice anchors the issues open at the First-tier Tribunal and the scope of any ADR settlement.
Expert: HMRC Charter Compliance
Engages the HMRC Charter duty of fairness, even-handedness and proportionality. The expert section evidences that the taxpayer (or the agent) has acted within the reasonable adviser standard and that ADR will give effect to the Charter duties.
Expert: FTT Rule 5(3)(j) Stay-for-ADR Route
Where a Notice of Appeal has been lodged with the First-tier Tribunal, the Tribunal has a case management power under rule 5(3)(j) of the FTT (Tax Chamber) Rules 2009 to stay the appeal for ADR. The expert section signposts the stay route.
2024/25 ADR Performance Context
The 2024/25 published statistics recorded 1,653 applications, 517 cases dealt with and an 88.7 per cent positive-outcome rate, with 90 per cent of cases resolved within 120 days. 43 per cent of cases exceeded the 4-month target — current HMRC ADR backlog is real but the success rate remains strong.
Free vs Expert Split
The free letter covers identification, the dispute summary, the procedural stage and why ADR is appropriate. Expert sections add the LSS application, the closure-notice scope, the HMRC Charter compliance and the FTT stay-for-ADR signpost.
Single Signer — Taxpayer or Agent
The application is signed by the British taxpayer (direct application) or by the 64-8-authorised agent (where the agent is making the application on behalf of the taxpayer). No witness or notarisation is required.
How to Apply for HMRC ADR Mediation
Follow these steps to produce a well-structured ADR mediation request HMRC's ADR team can process quickly across the United Kingdom.
- 1
Confirm the Dispute Is Suitable for ADR
ADR is suitable for factual disputes, mixed factual / interpretation disputes and (within LSS limits) some interpretation-only disputes. ADR is NOT suitable for avoidance schemes, abuse-of-right cases (Halifax), criminal investigations or matters under formal Code of Practice 9 investigation.
- 2
Identify the Procedural Stage
Pre-appeal (open enquiry / closure notice stage); post-appeal pre-tribunal (Notice of Appeal lodged with HMRC); FTT stayed for ADR (rule 5(3)(j) stay). The procedural stage determines the procedural framing of the request.
- 3
Identify the Sender — Taxpayer or 64-8 Agent
Direct application by the British taxpayer, or application via a 64-8-authorised tax agent (accountant, tax adviser or solicitor) on behalf of the taxpayer. The identification block adjusts accordingly.
- 4
Summarise the Dispute
Identify the tax (Income Tax / Corporation Tax / VAT / CGT / IHT / penalty), the disputed amount, the HMRC officer dealing with the case, the case reference and the procedural history. The summary should be concise and accurate.
- 5
Make the Case for ADR Suitability
Why is this dispute appropriate for ADR? Typical grounds — factual dispute where additional information may help; interpretation dispute that may be susceptible to compromise within the LSS; HMRC officer has reached an unduly entrenched position; communication difficulties impeding progress.
- 6
Apply the LSS 2017 Framework (Expert)
The Litigation and Settlement Strategy 2017 update governs how HMRC handles disputes — settlement within the boundaries of the law, not on the basis of perceived prejudice or convenience. The expert section makes the LSS case for ADR.
- 7
Engage the Tower MCashback Closure-Notice Scope (Expert)
The Supreme Court in Tower MCashback v HMRC [2011] UKSC 19 confirms that the appeal scope and the scope of any negotiated settlement turn on the closure notice. The expert section identifies the closure-notice anchors and the issues open at the First-tier Tribunal.
- 8
Send to HMRC ADR Team
Post to HMRC ADR Team, HM Revenue and Customs, BX9 1ZB, United Kingdom. Quote the case reference on every letter. Keep proof of postage. HMRC aim to confirm acceptance within 4 weeks; first mediation session within 8 weeks.
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Legal Considerations — HMRC ADR
HMRC ADR operates under United Kingdom tax statutes, HMRC published guidance and the Litigation and Settlement Strategy. The framework operates the same in England, Wales, Scotland and Northern Ireland.
This template is for general information and does not constitute legal or tax advice. The Chartered Institute of Taxation (CIOT), the Institute of Chartered Accountants in England and Wales (ICAEW), the Association of Chartered Certified Accountants (ACCA) and tax counsel advise on complex ADR cases. ADR runs parallel to (not in substitution for) the statutory appeal route — the right to a First-tier Tribunal hearing is preserved throughout.
Reviewed for the United Kingdom
Statutory & Guidance Framework
HMRC ADR operates under the published HMRC ADR Guidance (refreshed 2024) and the Litigation and Settlement Strategy (LSS) 2017 update. The statutory appeal route is preserved under section 49 of the Taxes Management Act 1970. Section 49A is the HMRC internal review route (often the first step; ADR may follow review). Rule 5 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) is the case management rule under which the FTT can stay an appeal for ADR (rule 5(3)(j)).
Litigation and Settlement Strategy (LSS) 2017
The LSS is HMRC's published framework for resolving disputes through agreement or litigation. The core LSS principle is that settlement must be within the boundaries of the law — not on the basis of perceived prejudice, commercial convenience or extraneous factors. The LSS recognises that many disputes have a permissible range of outcomes within the law and that ADR can identify the right outcome within that range. The CPR Part 1 + Pre-Action Protocol proportionate dispute resolution principle is analogous.
Tower MCashback v HMRC — Closure-Notice Scope
The Supreme Court in Tower MCashback v HMRC [2011] UKSC 19 confirms that the appeal scope and (by extension) the scope of any negotiated settlement turn on the closure notice. The closure notice anchors the issues open at the First-tier Tribunal — neither HMRC nor the taxpayer can broaden the dispute beyond what the closure notice put in issue. The Upper Tribunal in Eclipse Film Partners v HMRC [2016] UKUT 28 develops the point — closure-notice scope is a limit on the issues open at the FTT and at ADR.
Halifax — Abuse of Right Limits
The European Court in Halifax v Customs & Excise [2006] ECJ C-255/02 sets the abuse-of-right limit on the scope of any settlement — a settlement cannot give effect to an arrangement that is abusive in EU / retained EU law terms. The principle is preserved post-Brexit by sections 6(3) and 7A of the European Union (Withdrawal) Act 2018 as amended by the Retained EU Law (Revocation and Reform) Act 2023.
HMRC Charter Compliance
The HMRC Charter sets out HMRC's duties of fairness, even-handedness and proportionality. The Charter is reflected in the LSS 2017 update and is engaged on every ADR application. Where HMRC has acted unfairly — for example by reaching an unduly entrenched position, by failing to consider the taxpayer's evidence or by relying on a misapplied statutory provision — the Charter compliance argument supports the ADR application.
FTT Rule 5(3)(j) — Stay for ADR
Where a Notice of Appeal has been lodged with the First-tier Tribunal (Tax Chamber), the Tribunal has a case management power under rule 5(3)(j) of the FTT (Tax Chamber) Rules 2009 (SI 2009/273) to stay the appeal for ADR. The stay is normally for the duration of the ADR process and any subsequent post-mediation period agreed by the parties. The stay preserves the appeal — the right to a tribunal hearing is restored if ADR does not resolve the dispute.
Frequently Asked Questions
Build Your HMRC ADR Request
Produce a clear, evidence-based application HMRC's ADR team can process quickly. Whether the dispute is direct tax, VAT, a penalty bundle or a mixed-tax dispute, whether you are pre-appeal, post-appeal pre-tribunal or with a tribunal stay in place, the template applies the LSS 2017 framework, engages the Tower MCashback closure-notice scope, the HMRC Charter compliance and the FTT rule 5(3)(j) stay-for-ADR route across the United Kingdom.
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