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Alternative dispute resolution: Mediation techniques

25th Mar 2014
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As we’ve seen in the latest episode of BDO’s alternative dispute resolution (ADR) mini-series, mediation day can be tough on both the client and HMRC.

In today’s article, BDO tax investigators and Centre for Effective Dispute Resolution (CEDR) trained mediators Dawn Register and Helen Adams provide insights into the process at the exploration phase. 

Mediator techniques 

In the latest video, fictional mediator Anstey Thomas has taken the clients, Mr and Mrs Spencer-Smith, and the Revenue, and shown them to separate rooms to begin the ‘exploration’ phase.

This phase, Register explains, is where the mediator is building up rapport and importantly, trust.

“At this stage, it’s very much about understanding what motivates the clients and why they have got to this stage today - it’s often quite a long running dispute,” she said.

Techniques mediators use at this stage include open questioning where broad questions are posed to the client and Revenue in each of their rooms, to unravel the situation.

Mediators need to be able to pick up on points from open questions that may be important to the case, and be able to probe them further to understand the situation, issues and relevant points.

Being able to sit with a client or the Revenue, as mediation allows a mediator to do, is also a chance to see how genuine or credible a person is. For example, Register explained that when you see emotions arise in clients or something that piques HMRC’s interest these things are easily spotted by mediators and can prove crucial to a case.

Adams adds that non-verbal communication is very important. Mediators need to be able to demonstrate attentiveness to re-assure a party that they are being carefully listened to, taken seriously and are important.  Body language techniques are used to leave those in the process at ease, change the pace and also identify issues to probe further.  Mediators need to build rapport and credibility in the parties’ eyes using all these techniques as well as good use of the process.

“You’re not only trying to understand the background, you’re trying to go deeply into what the issues are. Things like trying not to leave it long between visits both sides helps,” she explained. 

Support on the day 

Mediators also have the role of aiding and supporting both clients and the Revenue on the day.

Adams explained the various duties, including showing both parties into their separate rooms before the joint meetings, keeping clients calm, reassuring them that they need only speak very little in the joint meeting if that’s what they want and making sure they’re comfortable if the day is not progressing very quickly at times.

Also giving both sides a break and providing emotional support is often part of the meditator's role.

“If they see you’re calm, they’ll be calm,” she added, “If they are upset then giving them time to express their feelings is key but if it’s all too much then some fresh air and a walk around the block often helps.”

Supporting the client with technical information - i.e. ensuring they understand what’s being said and if not, making sure all the relevant technical people are with the client on the day, is another way the client’s advisers provide support on the day.

“For example, in a tax case you might need a VAT specialist there, the team needs to be carefully put together for the day,” Register said.

She added that stopping the day becoming an ‘interview’ or interrogation of clients by HMRC is another role - which clients often fret about.

This includes ensuring clients that they won’t be questioned and making sure they’re comfortable talking openly and candidly about all points in their case.  Adams added that it might sometimes be appropriate to organise a session where the taxpayer is asked to explain something key to the issues to be resolved but where it’s made clear that there are to be no questions after they’ve spoken.  Both parties return to their rooms afterwards and the mediator can check in with HMRC’s side to gauge their reaction and discuss any queries. 

Encouraging full disclosure 

This point was highlighted in the video, when Mr and Mrs Spencer-Smith disclosed something on mediation day during the exploration phase with the mediator which was quite important to their case.

But it’s not just relevant to the taxpayer side. Register explained that it’s something that needs to be instilled on both the Revenue and client side for mediation to work.

“If HMRC has a particular thing they don’t like about the situation, they should share that with the mediator - and likewise, the taxpayer explain what went on or documents relevant to the case,” she said.

To facilitate sharing, both rapport and trust are important, so both sides feel able to participate fully.  The process helps as discussions with the mediator in a party’s private rooms are confidential and nothing is mentioned to the other party without specific prior authorisation.

Taxpayers may not make full disclosures if they feel afraid, think a point isn’t relevant or are simply not being asked a specific question.

This is what makes mediation useful at unlocking cases, Dawn Register explained further, as things come out on the day which may be difficult to express adequately through correspondence.

One example might be if HMRC didn’t understand a client’s niche business. It’s only where a client is able to meet the Revenue (directly or through the mediator) and feel comfortable enough in a structured environment to explain the ins and outs that the HMRC officer may be able to follow what is going on.

Disclosing a piece of information relevant to the case after mediation day can work if the final paperwork has been signed off - but may not bode well for a client’s credibility, Register added.

And having a tax investigator - such as Adams or Register - on the client team on mediation day is good for disclosure, they explained, as they are used to dealing with an investigation scenario and can spot when to ask the client questions, even if they’re not the mediator.

Register said “from experience we can often tell if there’s more to the story or it doesn’t add up and we do ask those questions to encourage disclosure.”

Next week, we’ll get to see how well these mediation techniques with HMRC and Mr and Mrs Spencer-Smith, as the third episode in the mini-series on the bargaining phase, is released on AccountingWEB. Stay tuned to this blog for more - and in the meantime, catch up with episode two.

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