'Get OnBord vs HMRC', taking the ADR route

The recent 'Get OnBord vs HMRC' tribunal hearing proved a troublesome one for HMRC. The tribunal decision determined that Get OnBord's activities were in line with the R&D criteria set out in BEIS guidelines. This outcome not only reaffirmed the legitimacy of Get OnBord's claim but also highlighted the deficiencies in HMRC's approach, particularly the caseworker's evident lack of technical expertise.

It is not known if the ADR route was considered and pursued in this case, however, we would always suggest going to ADR first in an effort to seek to minimise the stress, cost and time involved for all parties.

ADR is a cost-effective and less adversarial approach than the traditional tribunal route and has been part and parcel of HMRC’s processes since 2012. It offers a more streamlined resolution pathway when communications with HMRC break down, disputes arise over facts, or misunderstandings persist. The recent case demonstrates precisely these issues—where it was evident that there was a breakdown in communication and a fundamental misunderstanding of the R&D activities in question.

One of the key benefits of ADR is its ability to address disputes arising from incomplete or misunderstood information. It provides a platform for taxpayers to clarify why HMRC might have disagreed with submitted evidence or to understand the rationale behind HMRC's need for additional information. ADR can be employed at any juncture, even before a formal decision is taken, making it a proactive tool to seek a resolution.

Despite the apparent advantages, at Markel Tax we often experience a reluctance to fully embrace ADR amongst our accounting clients. This hesitance frequently stems from a lack of familiarity with the process or a distrust of its efficacy. While the mediators are HMRC employees, they are trained and skilled in mediation and take a neutral role in proceedings. In our experience, the mediator ensures impartiality throughout the process. This neutrality is fundamental in resolving disputes fairly and constructively.

The ADR process is informal compared to tribunal proceedings, but it needs to be thoroughly understood and all parties must be actively involved. The fact that a significant proportion of ADR cases conclude with a mutually agreeable outcome further validates its effectiveness. This informal nature can be advantageous, facilitating open dialogue and allowing for creative solutions that might not be feasible within the rigid framework of a tribunal.

Where disputes arise, both parties can get entrenched in their positions and it is vitally important to remain objective and focus on the strengths of your arguments. Disputes can become protracted and costly so the importance of understanding and utilising ADR, where appropriate, cannot be understated.

Our experience, however, is that many tax and accounting professionals shy away from pursuing this avenue, largely through a lack of understanding and distrust of the process. Changing this view is important. Seeking to settle disputes in an informal way, as the Tribunal would always recommend, with less stress and cost for all stakeholders should be embraced as a serious option when compared to going down the Tribunal route which can always be considered at a later date, if required.

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