Issues for the Mediator to discuss during a Pre-Mediation Zoom Call about preparatory steps & agreeing ‘criteria’ i.e. applicable ‘Principles of Repatriation.’ – I am devloping a table of Mediator Tools which is set out in my essay ‘Mediating Art & Cultural Heritage Disputes’ on the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk. What follows is an extract. 
1.    Inventory – Has a list and index been made of the artefacts [‘A‘] which an institution e.g. a museum [‘M’] is holding that are being claimed?
2.    When and how were the artefacts acquired? – i.e. how did they get there.
3.    Why is M holding A – i.e. what is A doing in the possession of M? e.g. is A even on display, in what context (e.g. in a cabinet of ‘curiosities’ / ‘spoils of war’), and for what purpose?
4.   What connection does the Claimant [‘C’] have to ‘A’ e.g. ancestral lineage i.e. because A is part of C’s living culture.
5.   Why is possession of A of importance to C? e.g. to keep their culture alive, because they can only record and transmit the sacred and artistic/artisan knowledge manifested in A by visiting M – which may not be accessible.
6.   How important is A to C? e.g. because A is part of C’s identity/genetic ‘cultural’ blueprint, and therefore A is of unique significance to C.
7.   What is the cultural home of A? [‘H’] – which is linked to the concepts of:
7.1  a ‘Lex Originis’;
7.2  the ‘legitimacy’ of a place where A should be located (‘Patrie’ – i.e. the cultural ‘homeland’ of A);
7.3  the sovereignty of indigenous peoples and their human rights; and
7.4  the concept for public display of  a ‘unity of art.’
8.   What is the applicable legal framework.
9.   What Code(s) of Ethics and Museum Guidance apply to M.
10. Is M under a wider moral and possibly ‘fiduciary duty’ under International Humanitarian Law, to strive to be a better ‘collaborative custodian’ of objects of cultural importance to an indigenous people?
11. Is M’s freedom to return A to C contrained by a legal prohibition against alienability?
12. Are there exceptions? – This is connected to the negotiation of an agreement to enter into arrangements which de facto return A to C, e.g. an indefinite loan of C to A.
13. What are M’s counter-arguments?
14. What larger ‘relationship’ issues are in play?
15. What repatriation precedents illustrate how a creative deal can lawfully be done to settle a moral claim, e.g.
15.1 The Constitution of Australia.
15.2 The Derynaflan Treasures.
15.3 The Hebrew Manuscripts in the Vatican Archives.
15.4 The Lakota Ghost Dance Shirt.
15.5 The Lewis Chess Pieces.
15.6 The Lindisfarne Gospels.
15.7 The Stone of Scone.
15.8 The determinations made by the UK Spoliations Committee about looted art during the Holocaust.
15.9 The Treaty of Tolentino – The fruits of war: how Napoleon’s looted art found its way home (theartnewspaper.com)
Legacy of Napoleon‘s artistic plunder on show in Rome (koreaherald.com)

This morning I wrote the opening paragraph to my essay entitled ‘Mediating Cultural Heritage Disputes’, which is a work in progress that I am writing on the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk.
‘Introduction

In a dispute about the repatriation and relocation of cultural, historical and sacred material (a ‘Cultural Heritage Dispute’), the P’s assert a moral case and make ethical i.e. value-driven choices which are not about money.  There is also a wider ‘relationship’ dimension in a repatriation dialogue, becuase ‘larger’ issues at play, e.g. righting a historical wrong which took place during colonial times. Mediation may therfore also be an opportunity to transform an acrimonious and long-standing political dispute into a constructive joint-problem solving exercise, by applying ‘fiduciary principles of international relations’ (see my essay a ‘Fiduciary Theory of Art’) to advance the foreign policy agenda and imperatives of each P through a process of Cultural Heritage Diplomacy.

In my experience, there is nearly always a deal to be done. First, however, the P‘s need to find common ground. Then a conversation can begin through a Mediator who has sufficient knowledge of:

(i)  ‘Art and Cultural Heritage Law’; and

(ii)  the wider cultural, social, political, and international relations issues, which underly and are driving the dispute.

However, whereas the mediation of a commercial art dispute may be concluded in the course of a series of one day mediation meetings in person or by Zoom/TEAMS, the process of conducting a repatriation dialogue is more protracted, and may involve a series of meetings and conversations that take place behind closed doors over a period of years. There is rarely a quick fix in the mediation of a moral claim about possession of cultural property. The challenge  for the P‘s is to develop a relationship which enables a deal to be done within the constraints that apply. That takes time, patience and sustained effort.

In this essay I will discuss: (i) the challenges facing Mediators in steering the participants toward resolution in a‘Cultural Heritage’ dispute; (ii) the necessary ‘qualities’ of the Mediator; and (iii) ‘tools’ for overcoming and reconciling: conflicting perspectives; agendas; and imperatives, in order to facilitate a lawful, practical, and sustainable solution to the multi-faceted underlying problem which lies at the heart of a moral claim for the repatriation and relocation of cultural, historical and sacred material.’

Part 2 of my article about the Mediation of Tax Disputes was published today online and in print by Taxation (Tolley). https://lnkd.in/eeP3-vCY

For subscribers to Taxation the link to the article is: Off to mediation with HMRC | Taxation
There are also links on the ‘Publications’ page to my other related and recently published articles:
– ‘Follow the Yellow Brick Road – Off to Mediation with HMRC – Part 1’. 
– ‘Mediating Probate and Trust Disputes – Process Challenges and Tools – Part 1.’ Published online by Oxford University Press in Trusts & Trustees 14.11.2022 which will be published in hardcopy in the Journal in February 2022.].
– ‘Back to the future’ – Part 2 – Mediation and Estate/Business Succession Planning. Taxation (Tolley) 08.03.2022.
– ‘Back to the future’ – Part 1 – Mediation and the tax-efficient settlement of probate disputes. Taxation (Tolley) 01.03.2022.
 
The ‘Tax Gap’ i.e the amount of uncollected tax = £36 Billion.
The hole in public finances = £40-50 Billion.
£36 Billion = 90% of £40 Billion.
Therefore, the amount of uncollected tax a proportion of which can be settled and collected through Mediation of tax disputes, represents 90% of the hole (at its narrowest) in the public finances. See Uncollected tax which can be settled through Mediation = 90% of the hole in public finances | Carl’s Wealth Planning Blog
As I discuss in Part 1 of the article:
·        Tax mediation Works.
·        Mediation is available in almost any kind of tax dispute, and HMRC are keen to encourage tax-payers to enter into the process.
·        However, the total number of tax disputes that entered into mediation in 2021/2022 was about 1000, which is a tiny fraction of the total number of tax disputes that remain unresolved and would benefit from ADR, thereby also saving FTT resources funded by all taxpayers.
 
In Part 2, I conclude:
·        Success in HMRC ADR depends upon HMRC and the TP [Taxpayer] acting reciprocally in good faith – which is a two-way street.
·        The HMRC Mediator will treat the TP’s ‘negotiating position’ as ‘private’ unless and until the TP is prepared to share it with the HMRC case team.
·        In order to develop creative and bespoke ‘pre-mediation strategies’, the P’s need to think commercially, and put a ‘price’ on settlement versus proceeding to trial.
·        At some point in the Mediation Day, the Mediator has to say to both the TP and HMRC – ‘Is there any benefit to you in settling today? If there is put a value on it. Combine that with pricing up the risk of doing better or worse at a hearing and that gives you the exit price.’
·        Thus, calculation of the ‘exit price’ by each P ahead of the Mediation Day, is the ‘golden key’ to success in the Mediation of a tax dispute.

What can Government and Mediation organisations do to: (i) unchain Mediation in tax disputes; (ii) educate; and (iii) encourage the use of Mediation by TP’s – thereby ednabling the ‘Tax Gap’ to be reduced?

In other words, ‘What systemic, i.e. institutional, policy and management changes, need to be made to enhance the collection of unpaid tax through Mediation by encouraging TP’s to enter into the process? When researching Part 3, the author will discuss these issues with constituents in each participant community. Meanwhile to catalyse debate and test the institutional resilience of the ‘system’, the author poses the following two questions. If readers would like to comment either on an ‘attributable’ or ‘non-attributable’ basis about any of the issues discussed in these articles, they are invited to write to the author at carl@ihtbar.com:

• While the contents of the Record (which is not a minute of meeting and is essentially a summary of: (a) issues that have been agreed; (b) issues which remain to be agreed^[i]; and (c) proposals for continuing the Mediation conversation going forward toward final overall resolution), must be agreed,  what legal justification is there for any concern by a TP or their legal representatives, that anything said in the course of Mediation may subsequently be relied upon by HMRC as being a new and significant tax fact.
• What contract terms need to be agreed by a COM^[ii] with a TP in order to both comply with HMRC overriding ‘Principles,’ and the:
• Code of Professional Conduct of the COM’s professional regulator.
• Code of Ethics, of any Mediation organisation, to which the COM belongs.
• Terms of the COM’s professional indemnity cover.’

[i] I.E. there will be no Record of the outcome unless and until it has been agreed by both sides.

[ii] The author understands that while in certain cases, HMRC will agree to the appointment of a single external Mediator, that the number of cases in which this is appropriate and has happened is vanishingly small.

When I was a precocious 8 year old, there was a board game we played at boarding school in front of a roaring log fire in a room surrounded by ancient armour, swords, shields, and with the mounted heads of long gone deer with antlers on the walls, on cold winter evenings called – ‘Diplomacy’. I recommend it to all young megalomaniacs who want to take over the world.

The room in which we played was the room in which one of the Knights who murdered Archbishop Thomas Beckett in 1170 had stood before riding out to Canterbury. The floor was made up of grey and heavily worn down paving stones covered by a Persian rug on which me and my friends sat to play board games whilst being schooled in the art of ‘strategic Ambiguity’! with history and dark Jacobean furniture all around us. In a corner near the ceiling was the orginal Minstrel’s or Fool’s Gallery – looking down on us. We felt its presence!

The ‘deal making’ skills players develop in this game is also excellent training for budding Mediation Advocates in Contentious Probate Disputes (think of your ‘Empire’ as being an ‘Estate’!).

Of course I usually won, and naturally became the only Mediation Advocate in my year. Sadly I do not rule the world!

As a young ‘strategist’, the game taught me that the international order is ‘anarchic’ because there is no ‘higher authority’ i.e. ‘parent’ who can step in to save the players from themselves.

Human nature dictated that each player in pursuit of their own selfish i.e. ‘national’ interest, competed for power. This was measured by territory, which depended upon access to the sea (as the game was set in pre-World War 1 Imperial Europe). 

‘Survival’ depended upon being bigger, more cunning, and more ruthless than your opponents – which is the psychology of ‘hegemons’ in a ‘realist’ paradigm of international relations.

One of the strategic principles which guided my tactics was ‘divide and rule’. I trusted no one and sought the trust of strategic allies who would both weaken my opponents and themselves in the process. The weaker my allies were, the more they needed me. I therefore disguised competition as co-operation.

Today, I am still a ‘Realist’ but as a ‘Mediator’, I recognise that while there is no ‘parent’ in the international order, there are higher ‘fiduciary’ principles of international relations which are existential. Therefore, ‘existential fiduciary principles of international relations’ are part of an antithesis to ‘realism’, because participants in dispute can avoid/settle their disputes by finding ‘common ground’ instead of going to war on the ‘battleground’.

As a writer I am formulating, ‘Principles of Geopolitical Mediation’, see the ‘Geopolitical Mediation’ page at www.diplomaticlawguide.com and my essay a ‘Fiduciary Theory of Art’ on the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk (based upon the idea of ‘Cultural Heritage Diplomacy’). The underlying premise is that peaceful and prosperous co-existence depends upon working together to solve existential threats, e.g. climate change, famine, drought and disease. The rationality of this thesis runs counter to human nature, so as a ‘realist’ I believe that the insecurity of nation states and their political elites will continue to drive armed conflict, just as in the game ‘Diplomacy’. However, the difference between the game and the world today, is that we live in a ‘missile’ age. Therefore, the risk of sleep-walking into war by accident is existential – as indeed WW1 proved to be to most of the Crown Heads of Europe. My recommended Christmas reading is ‘The Tragedy of Great Power Politics’ by John Mearsheimer, and ‘The World: A Family History’ by Simon Sebag Montefiore.

Wishing a Merry Christmas and a Happy and Peaceful New Year to all readers of my blog wherever you may be.

The ‘Tax Gap’ i.e the amount of uncollected tax = £36 Billion.

The hole in public finances = £40-50 Billion.

£36 Billion = 90% of £40 Billion.

Therefore, the amount of uncollected tax a proportion of which can be settled and collected through Mediation of tax disputes, represents 90% of the hole (at its narrowest) in the public finances. See Part 1 of my article about Mediation of Tax Disputes published today online and in print in Taxation (Tolley). 

Link for Taxation subscribers to my article published today – Off to mediation with HMRC | Taxation

Why do politicians appear to be doing nothing to encourage the use of Mediation as a tool in collecting unpaid tax in order to reduce the massive hole in the public finances? One solution is to make Mediation of certain tax disputes mandatory, which will also save the Exchequer court and litigation costs (which are ultimately funded by all taxpayers). Another reform would be to remove Schedule 36 cases from the category of ‘excluded cases’. However politicians do not appear to be debating the reduction of the hole in the public finances by encouraging Mediation in Tax Disputes. Why? 

Part 2 will be published in the next issue of Taxation on 5 January 2023. The proof-reading is taking place tomorrow morning – and then it is Christmas!

Please note:

The ‘tax gap’ is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. In calculating the gap, HMRC takes into account both the letter and spirit of tax law. The ‘theoretical tax liability’ represents the tax that would be paid if all individuals, businesses and companies complied with both the letter of the law and HMRC’s interpretation of Parliament’s intention in setting law (referred to as the spirit of the law). The gap does not take account of taxes and charges administered by bodies other than HMRC. These include council tax, business rates, vehicle excise duty and the London congestion charge. Other exclusions include error and fraud in tax credits and in the Covid-19 support schemes.

Because of the legal premise (above) underlying the calculation of the tax gap, unpaid tax is axiomatically in dispute.

The amount of uncollected tax is currently estimated to be £36 Billion (i.e. in excess of 5% of the total annual tax take) – see: https://lordslibrary.parliament.uk/unpaid-taxes-the-tax-gap/. ‘On 8 February 2022, HMRC published an update to correct an overestimation in the corporation tax and overall tax gap statistics for 2018/19 and 2019/20. In 2019/20, the corporation tax gap was estimated at 7.2%, not 8% as stated in the original publication. The overall tax gap was estimated at 5.2% of total tax liabilities, not 5.3%.’ £36Bn was an increase from an estimated £32bn for the previous year, i.e. the gap has increased.

See also: ‘HMRC criticised over £32bn tax gap estimate’ in the Guardian.
‘Tax experts say shortfall between expected income and actual receipts underplays true scale of fraud in 2020-21 financial year. … Rachael Griffin, a tax and financial planning expert at the investment firm Quilter, said HMRC had shown it was unable to reduce the tax gap after a run of six years when it remained at a similar level.
“The stability of the tax gap over the last few years points to there needing to be a radical change if we are going to ensure that the public coffers are refilled, particularly after they have been so heavily drained due to Covid. The Treasury coffers cannot afford the continuation of this level of tax gap, the missing £32bn would be a welcome boost to the economy.”‘ See also – https://oxfordtax.sbs.ox.ac.uk/what-tax-gap#:~:text=The%20%E2%80%9Ctax%20gap%E2%80%9D%20has%20become,tax%20that%20should%20be%20collected%E2%80%9D

The following articles have been/are about to be published:

• ‘Follow the Yellow Brick Road – Off to Mediation with HMRC – Part 1’, went to press yesterday for publication in Taxation by Tolley 15.12.2022.  www.taxation.co.uk
  
• ‘Follow the Yellow Brick Road – Off to Mediation with HMRC – Part 2’ is scheduled for publication on 5 January 2023. Part 3 will be written in 2023.
• ‘Mediating Probate and Trust Disputes – Process Challenges and Tools – Part 1.’ Published online by Oxford University Press in Trusts & Trustees (https://academic.oup.com/tandt) . The print copy will be published in the Journal in February 2022. Part 2 will be written in 2023. Link to the article [Mediating probate and trust disputes—process challenges and tools: part 1 | Trusts & Trustees | Oxford Academic (oup.com)].

I am awaiting links to each article from the publishers which will be posted on the ‘Publications’ page at www.carlislam.co.uk.

That page also contains links to my articles about Mediation written earlier in the year:

• ‘Back to the future’ – Part 1 – Mediation and the tax-efficient settlement of probate disputes. Taxation (Tolley) 01.03.2022.
• ‘Back to the future’ – Part 2 – Mediation and Estate/Business Succession Planning. Taxation (Tolley) 08.03.2022.

To request a PDF copy, please email carl@ihtbar.com.

Wishing all readers a Joyous Christmastime and a Happy and Prosperous New Year!

Carl Islam, Barrister and Accredited Mediator – Probate, Trust, Tax & Art Disputes at 1 EC Barristers, 1 Essex Court, Temple, London EC4Y 9AR (https://1ec.co.uk/), see the ‘Trusts’ and ‘Tax’ Practice Area pages of Chambers’ new website and www.carlislam.co,uk

One of my practice areas is ‘duties’ and ‘powers’ of executors and trustees, and in early 2023 I am writing an essay for the Diploma in Art Law course at the Institute of Art & Law about, ‘Duties and Powers of Trustees of Art and Cultural Heritage Assets.’ (https://ial.uk.com/). This connects with inter-related issues about: restitution; de-accessioning (including art loans); and repatriation (which is the module I am currently undertaking). An issue which I was recently asked about is the effect of a ‘caveat’ in a probate claim. The following is summary of principles. An executor is not under a duty to administer the estate until after a grant of probate has been obtained, s.25(a) AEA 1925. ‘Where an executor is appointed by a will, he derives title from the will, and the property of the deceased vests in him from the moment of the testator’s [T’s] death, so that probate is said to have relation back to the time of [T’s] death. Thus, while an executor cannot rely on his title in any court without producing the grant of probate, that grant is merely the authenticated evidence of his title. … Because an executor’s title is derived from the will he may, before he proves the will, do almost all the acts which are an incident of his office, except some which relate to litigation.’ (Tristram & Cootes, para 5-04). The caveat will stop someone from obtaining a grant and administering the estate while those concerns are being investigated. This will then allow the beneficiaries (the persons receiving assets) to take time to digest what has happened, to receive and consider legal advice, and to make investigations. As a matter of prudence, an Executor who applies estate monies for any litigation purpose before a grant of probate is obtained, can and should apply for directions, otherwise if he has acted in excess of his powers or in breach of his overriding fiduciary duty to preserve the estate, then a personal claim could be made against him for equitable compensation to be paid to the estate, and he may lose his indemnity. The litmus test of whether an executor can do anything before obtaining a grant of probate is whether the act in question is ‘incidental’ to his office as a PR. Under the AEA 1925, s.25, an executor’s duty to administer an estate does not arise until after probate has been granted. Therefore, paying monies to a solicitor to prove the executor’s title, i.e. by setting aside the caveat and obtaining a grant, cannot be ‘incidental’, because the duty to administer has not arisen. However, this is nothing more than a logical argument, as I can find no authority to support the legal proposition.

The following post appears on the ‘Mediation of Art & Cultural heritage Disputes’ page at www.carlislam.co.uk

Copyright subsists in original artistic works,s.1(1)(a) of the Copyright Designs and Patents Act 1988 [‘CDPA’]. ‘Artistic work’ includes a ‘photograph’. ‘Photograph’ means a ‘recording of light or other radiation on any medium on which an image is produced or from which an image made by any means be produced and which is not part of a film’ (s.4(2) CDPA).

In Temple Island v. New English Teas [2012] WSPCC 1 the claimant claimed infringement of copyright. Judge Birss KC in finding in in favour of the Claimant stated: ‘This superficially simple question involves a tricky area of law, i.e. copyright in photographs; and, in the end, turns on a disputed qualitative judgment. … A photograph of an object found in nature or for that matter a building, which although not natural is something found by the creator and not created by him, can have the character of an artistic work in terms of copyright law if the task of taking the photograph leaves ample room for an individual arrangement. What is decisive are the arrangements (motif, visual angle, illumination etc) selected by the photographer. … What then is the scope of photographic copyright? The question is answered by drawing attention to 3 aspects in which there is room for originality in photography:

1. Residing in specialities of angle of shot, light and shade, exposure and effects achieved with filters, developing techniques and so on;
2. Residing in the creation of the scene to be photographed;
3. Deriving from being in the right place at the right time .

[The] composition of a photograph is capable of being a source of originality. The composition of an image will … derive from the “angle shot” … but also from the field of view … elements which the photographer may have created and … elements arising from being in the right place at the right time. The resulting composition is capable of being the aggregate result of all these factors … Ultimately … the composition of the image can be the product of the skill and labour (or intellectual creation) of a photographer and … skill and labour/intellectual creation directed to that end can give rise to copyright.

Copyright is infringed by reproducing the whole or a substantial part of the work in a material form (s.16  and s.17 CDPA). [A] “substantial part” is a matter of quality not quantity. … Copying a photograph does not require a facsimile reproduction, it is enough to recreate the scene or a substantial part of it.  … As a matter of principle photographs, as one species of artistic work in s.4 of the Act, are not to be treated differently from other artistic works and  one consequence must be that s.17 cannot be construed as referring only to facsimile reproductions of a photograph itself. … Visual significance must also be relevant to infringement and to the question of whether a substantial part of an artistic work has been taken. What falls to be considered, in order to decide if a substantial part of an artistic work has been reproduced, are elements of the work which had visual significance. What is visually significant in an artistic work is not the skill and labour (or intellectual creative effort) which led up to the work, it is the product of that activity. The fact that the artist may have used commonplace techniques to produce his work is not the issue. What is important is that he or she has used them under the guidance of their own aesthetic sense to create the visual effect in question. Just because the Act provides for copyright in these original artistic works irrespective of their artistic quality (s.41(a) does not mean that one ignores what they look like and focuses only on the work which went into creating them.  … On the question of copying, I find the common elements between the defendants work and the claimant’s work are causally related. In other words, they have been copied.’

Other posts available to view (toward the end of the ‘Mediation of Art & Cultural Heritage Disputes’ page at www.carlislam.co.uk, above the ‘Bibliography’ include:

• Art & Cultural Heritage Restitution Litigation in the United States (‘US’) – Limitation periods. | Carl’s Wealth Planning Blog
• Art restitution & Mediation | Carl’s Wealth Planning Blog
• Copyright protection of Art | Carl’s Wealth Planning Blog
• British cultural heritage diplomacy post-BREXIT | Carl’s Wealth Planning Blog
• Does equity give teeth to international humanitarian law? | Carl’s Wealth Planning Blog
• Estate Planning for art assets | Carl’s Wealth Planning Blog
• Humanitarian Mediation – Diplomatic Law Guide
• Islamic law principles applicable to the administration of trusts | Carl’s Wealth Planning Blog
• Jurisdiction & Applicable Law in an International Trust Dispute | Carl’s Wealth Planning Blog
• Moral Rights of Artists | Carl’s Wealth Planning Blog
• Use of British soft power to protect Cultural Heritage in a conflict zone? – UK Review of Security, Defence, Development and Foreign Policy (March 2021) | Carl’s Wealth Planning Blog
• Recent insight & my next article for ‘Trusts & Trustees’ | Carl’s Wealth Planning Blog
• The state as a fiduciary? | Carl’s Wealth Planning Blog
• Who owns history? | Carl’s Wealth Planning Blog

It is not all about economic growth – The hole in the public finances = £40 Billion. Uncollected tax (i.e. frozen in legal disputes) = £36 Billion, i.e. 5%+ of the total annual tax take. ‘In 2019/20, the corporation tax gap was estimated at 7.2% … The overall tax gap was estimated at 5.2% of total tax liabilities.’ [Unpaid taxes: the ‘tax gap’ – House of Lords Library (parliament.uk)].

What can the Government do to enhance the use of Mediation in order to: (i) unfreeze and collect unpaid tax locked in legal disputes; and (ii) avoid the incurrence of continuing and exponential litigation risks and costs (ultimately funded by all taxpayers)?

The 1st and 2nd Parts of a 3 Part article I have been commissioned by Taxation (Tolley) to write entitled, ‘Follow the Yellow Brick Road – Off to Mediation with HMRC’, was submitted to my editor on Friday for publication over Christmas and New Year. Mediation is available in almost any kind of tax dispute and HMRC are keen to encourage tax-payers to enter into the process. ADR in tax disputes may not be perfect but it works. The number of cases resolved through ADR was 78% in 2020/2021. However, the total number of tax disputes that entered into Mediation was only around 1000, which is a fraction of the total number of tax disputes that remain unresolved and could benefit from ADR.

In the 1st Part, I discuss what the Mediation process involves in the context and dimension of a tax dispute, and HMRC’s ‘ground-rules’ for the conduct of a Mediation. In the 2nd Part, I discuss what happens during the process. In the 3rd Part, to be written in 2023, I will focus on Mediator ‘challenges’ and ‘tools’.

In order to make taxpayers more aware and comfortable about how the process works, and thereby to increase the use of Mediation, the author understands that in the New Year, HMRC are planning to publish a new Factsheet about ADR and updated internal guidance. These developments in the ongoing evolution of Mediation in tax disputes will be discussed in Part 3.
The use of Mediation in tax disputes is also linked to the possible development of a hybrid form of ADR which involves a combination of ‘Early Neutral Evaluation’/’Expert Determination’ and Mediation which I will devlop as a concept and discuss in Part 3, i.e. as method for breaking ‘deadlock’ where HMRC adopts a rigid stance about a technical tax issue, i.e. because until the FTT decides otherwise, HMRC are under a compulsion to be fair to all taxpayers, and in following the LSS, HMRC conclude that they cannot deviate.
I understand there has been a recent initiative by Government Ministers to increase Mediation, and evaluation of possible ‘mandatory’ or ‘automatic’ Mediation in tax cases. The reduction of the £40 Billion hole in public finances using Mediation to collect £35 Billion in unpaid tax ought therefore be high up on the agenda of the Government. However it does not appear to be on the radar of politicians and political journalists. Why?

What ‘systemic’, i.e.’ institutional’, ‘policy’ and ‘management’ changes, need to be made to enhance the collection of unpaid tax through Mediation? To catalyse debate and test the institutional resilience of the ‘system’, I pose two questions.
(i)           While the contents of the Record (which is not a minute of meeting and is essentially a summary of: (a) issues that have been agreed; (b) issues which remain to be agreed; and (c) proposals for continuing the Mediation conversation going forward toward final overall resolution), must be agreed,  what legal justification is there for any concern by a TP or their legal representatives, that anything said in the course of Mediation may subsequently be relied upon by HMRC as being a new and significant tax fact.
(ii)         What contract terms need to be agreed by a COM with a TP in order to both comply with HMRC’s overriding ‘Principles,’ and the:
(a) Code of Professional Conduct of the COM’s professional regulator.
(b) Code of Ethics, of any Mediation organisation, to which the COM belongs.
(c) Terms of the COM’s professional indemnity cover.

Disputes tend to arise because of: 
·       Limited detailed design information about the condition of the vessel available prior to delivery. 
·       Limited opportunity to thoroughly identify the existence and condition of structures within the hull and the condition of the vessel during pre-contract inspections of the vessel, and, unseen:  
–      obstructions; and
–      deterioration e.g. pipework or steelwork requiring renewal and modification which at the time of inspection was hidden from view behind sheet metal cladding. 
·       Undefined ancillary work obligations implicit in broad work scope obligations. 
·       Fast track re-delivery programmes which compel Yards to develop design in parallel with construction, and the problem of continuously monitoring the overall impact of the implementation of designs on the meta-centric height, tonnage, and the stability of the vessel. 
·       The often unprecedented work required to convert a vessel. 
·       Inevitable integration of old and new designs, material and equipment to form an integrated working system, and the problem of new materials affecting the balance of stresses and forces in non-renewed sections of the vessel, resulting in damage to non-renewed structures inside the vessel [‘V’]. 
·       The performance of unspecified design work to implement the requirements of the vessel’s Classification Society, and of regulatory authorities, which were not published or notified prior to contracting in respect of both the existing vessel design and the conversion.   
In principle there is a design element in the whole spectrum of ship-conversion activities ranging from concept design to appearance, functional criteria, detailed design, choice of materials and methods of work. Unspecified design work inevitably results in consequences which are only realised following construction. The combined impact of unspecified design work in aggregate can result in radical changes in the:  
·      Planned and priced volume of steelwork incorporated in V. 
·      Specified deadweight tonnage of V. 
·      Specified speed and fuel consumption of V.
·      Specified meta-centric height of V.
·      Stability and trim of V. 
Consequently the vessel presented to Owners at re-delivery may be materially non-compliant with the Contract. The performance of unspecified design work inevitably results in the incurrence by the Yard of extra man-hours and materials in carrying out the unspecified work, and subject to critical path impact and programmed float, in delay and disruption. For a commercial overview, see my International Conference Paper presented to the Royal Institute of Naval Architects in London about the ‘Legal and Commercial Consequences of Performing Unspecified Design Work in Ship-Conversion Projects’. You can download this on the ‘Publications’ page at www.carlislam.co.uk . I may update the legal analysis and case law in 2023.