A statutory review is a legal right to have an appealable decision looked at again by an independent HMRC review officer, who must normally reply within 45 days. Alternative dispute resolution (ADR) is a voluntary mediation service, accepted case by case, in which an HMRC mediator helps you and the caseworker negotiate. You can use both: HMRC says ADR does not affect your right to a review or an appeal, and once a decision has been made the usual order is review first, then a tribunal appeal, then ADR.
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What is the basic difference between the two?
A review is a decision process. For direct taxes it is governed by sections 49A to 49I of the Taxes Management Act 1970 and for VAT by sections 83A to 83G of the Value Added Tax Act 1994. A review officer reads the file, considers your representations and concludes in writing that the decision is upheld, varied or cancelled. ARTG4080 says the officer checks the decision against the law and HMRC policy and has no discretion to go outside current policy and practice.
ADR is a negotiation process. HMRC’s Alternative Dispute Resolution Guidance (ADRG01000) describes it as a flexible process in which an impartial HMRC mediator helps the parties work towards resolving the dispute, while the parties keep control of whether to settle. ADRG01600 says the mediator will not impose a solution. Nobody decides the case for you; either you and HMRC agree, or you do not.
When can each one be used?
A review is only available once there is an appealable decision. For income tax, corporation tax and other direct taxes you must first appeal to HMRC; you can then require a review under section 49B TMA, or HMRC may offer one under section 49C. For VAT and other indirect taxes HMRC offers a review in the decision letter. In both cases you have 30 days from the date of the relevant document to accept, and a review is no longer available once the appeal has been notified to the tribunal.
ADR has a wider window. GOV.UK guidance says you can apply at any stage of an enquiry and at any stage of tribunal proceedings, including where a compliance check has stalled before any decision. After an appealable decision, there are conditions:
- Direct tax: you can apply if HMRC has accepted your appeal but not offered a review. If you accepted a review, you must wait for it to end, appeal to the tribunal and receive an acknowledgement. If you decline a review offer, you must appeal to the tribunal first.
- Indirect tax: if you accepted a review, you must wait for it to end, appeal to the tribunal and receive an acknowledgement. If you do not intend to accept the review, you must appeal to the tribunal first. Factsheet CC/FS21 adds that you can apply where HMRC has agreed to extend the period for accepting the review, and that any hardship application must be decided before you apply.
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Which is quicker?
The review has a statutory clock. Section 49E(6) TMA and section 83F(6) VATA require conclusions within 45 days, or another agreed period, and if HMRC misses the deadline the decision is treated as upheld so you can move on to the tribunal.
ADR has no statutory timetable, but HMRC sets targets. It aims to tell you within 30 days whether your case is accepted, you must be available for a mediation meeting within 90 days of acceptance, and ADRG01100 says that once mediation starts the aim is to conclude within four months. ADRG02500 says the mediator aims to complete the record of the outcome within a week of the mediation day.
Which costs less?
For either route, the main cost is your own time and any adviser’s fees. GOV.UK’s tax tribunal guidance says a review can be quicker and cheaper than appealing to the tribunal. A review usually needs a clear written explanation of why the decision is wrong and the evidence for it.
ADR asks for more preparation and attendance. You must write an opening statement of no more than two sides of A4, disclose all relevant facts and evidence in writing beforehand, respond to requests within 15 days and attend a meeting that may last a full day. Against that, CC/FS21 says ADR aims to reduce costs for both sides and, in complex cases, may remove the need for a long formal written submission to the tribunal. ADRG01200 allows you to bring in an external accredited mediator, but only at your own cost.
The factsheet also notes that the First tier Tribunal’s ADR practice statement explains when costs may be awarded if either party unreasonably refuses to consider ADR. Under rule 10 of the tribunal’s tax chamber rules, costs are otherwise limited mainly to unreasonable conduct and Complex cases. Our page on tribunal costs explains the rules.
Which disputes suit a review?
A review works best where you think the decision is wrong on the existing file: the officer misread the law, overlooked evidence you had already supplied, or applied the wrong HMRC guidance. Because the officer applies HMRC policy, a review is less likely to help where your argument is that HMRC’s published view of the law is itself wrong. ARTG4630 also says substantial new information is normally referred back to the decision maker, so a review is not the place to rebuild a case from scratch.
Which disputes suit ADR?
HMRC’s guidance lists situations where ADR helps: communications have broken down, the facts are disputed, the dispute stems from a misunderstanding, or you want to know why HMRC has rejected your evidence or keeps asking for more. ADRG02700 says even “all or nothing” technical disputes may benefit, because hearing HMRC’s position directly can help a taxpayer decide whether to go on.
ADR does not change the law HMRC applies. ADRG02600 explains that settlements follow the Litigation and Settlement Strategy: HMRC will not settle for less than it would reasonably expect to obtain from litigation, and each dispute is resolved on its own merits rather than as a package deal. HMRC also lists cases it treats as unsuitable, including criminal investigations, cases stood behind a lead case and automatic penalties. These are covered in when HMRC refuses ADR.
How do they compare side by side?
| Feature | Statutory review | ADR |
|---|---|---|
| Legal basis | TMA 1970 ss49A to 49I; VATA 1994 ss83A to 83G | Non statutory HMRC service |
| Who decides | Review officer | You and HMRC by agreement |
| Time limit to start | 30 days from the relevant document | Any stage, subject to sequencing rules |
| Target duration | 45 days unless extended | Aim of four months once started |
| Can HMRC refuse it | No, if requested in time | Yes, case by case |
| Outcome | Upheld, varied or cancelled | Agreement, partial agreement or none |
How might both be used in one case?
Illustration only. A café owner receives a VAT assessment based on HMRC’s estimate of unrecorded cash takings. She accepts the review offer, but the review officer upholds the assessment because the till records are incomplete. She appeals to the tribunal within 30 days of the conclusion letter and, once the tribunal acknowledges the appeal, applies for ADR. At mediation the dispute is about what proportion of sales were in cash, which is the kind of factual question mediation handles well. The parties agree a figure, and the mediator records the settlement of the appeal under section 85 VATA. The process is described in what happens at an HMRC ADR mediation.
What mistakes should I avoid?
- Treating an ADR application as if it protected your appeal rights. The 30 day limits for review and appeal still apply.
- Declining a review in order to go to ADR sooner, without considering whether the review alone might resolve a straightforward error.
- Going into ADR expecting HMRC to split the difference on a point of law. The Litigation and Settlement Strategy does not allow that.
- Applying for ADR on an indirect tax case before the tribunal has acknowledged the appeal.
For an overview of the statutory route, see HMRC statutory review and the tax tribunal. The VAT procedure is set out step by step in how VAT statutory reviews work.
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Related Accountapedia entries
- HMRC Statutory Review and the Tax Tribunal
- What happens at an HMRC ADR mediation
- Accepting HMRC’s offer of a statutory review
- When HMRC refuses an ADR application
- Does HMRC Choose Tax Returns at Random?
Sources
- legislation.gov.uk: Act 1970 c. 9, section 49A
- legislation.gov.uk: Act 1970 c. 9, section 49B
- legislation.gov.uk: Act 1970 c. 9, section 49C
- legislation.gov.uk: Act 1970 c. 9, section 49E
- legislation.gov.uk: Act 1994 c. 23, section 83C
- legislation.gov.uk: Act 1994 c. 23, section 83F
- legislation.gov.uk: Act 1994 c. 23, section 85
- GOV.UK: Manual page ARTG4080
- GOV.UK: Manual page ARTG4630
- GOV.UK: Manual page ADRG01000
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.