Strike out application dismissed
2016 case note - strike out application dismissed by TRA - service, disputes process.
The Taxation Review Authority ("TRA") dismissed the Commissioner of Inland Revenue’s ("the Commissioner") strike out application as service of the notices of assessment did not appear to be satisfactory and issues as to the disputant’s standing to bring proceedings needed to be canvassed.
The decision highlights the necessity for the Commissioner to ensure compliance with s 14(8) of the Tax Administration Act 1994 ("TAA") when issuing notices of assessment by post.
The Commissioner applied to strike out the disputant’s challenge proceedings on the basis that the claim had no reasonable cause of action as the disputant had not complied with the requirements of the disputes process. The disputant opposed the application and argued that there was no evidence of his assessments before the TRA.
On 17 February 2011, the disputant was adjudicated bankrupt following a previous investigation by the Commissioner. In 2013 the disputant was charged with, and subsequently pleaded guilty to, various offences of failing to file income tax returns with the intention of evading the assessment or payment of tax and tax evasion.
In December 2013, the Commissioner made a number of default assessments and subsequently issued notices of assessment to the disputant. Notices of assessment for the majority of the relevant periods/income years were sent to the Official Assignee at a Private Bag address in March 2014.
Further copies of the notices of assessments were issued to the disputant in March and April 2014. The disputant did not take any steps and consequently on 1 August 2014 the Commissioner wrote to the disputant advising that he was deemed to have accepted the assessments.
Judgment was subsequently entered against the disputant in June 2015 for the debt. On 25 September 2015 the disputant issued a notice of proposed adjustment ("NOPA") to the Commissioner. The disputant alleged that no notice of disputable decision had been issued and no assessments had been made. The Commissioner replied on 28 September 2015, repeating her advice that as the disputant had not supplied a NOPA and the requisite tax returns within the required period, the assessments were now deemed to be accepted.
On 2 October 2015 the disputant again corresponded with the Commissioner, attaching a further copy of his NOPA. The Commissioner responded on 29 October 2015, informing the disputant that the Commissioner had considered whether his late NOPA could be accepted however had determined that the requirements of s 89K of the TAA had not been met. The disputant subsequently issued challenge proceedings.
Although acknowledging there were considerable difficulties with the disputant’s claim, the TRA was not prepared to grant the Commissioner’s application to strike out the proceeding.
The Commissioner had submitted that the disputant had not complied with the requirements of the disputes process in Part 4A of the TAA which precede the right to challenge under Part 8A. In particular, the Commissioner contended the disputant had failed to file a NOPA within the applicable response period; had not satisfied the requirements under s 89K; and had failed to file the outstanding returns as required by s 89D.
However, the TRA was not satisfied on the evidence before it that any of the notices of assessment were properly served on the Official Assignee in accordance with s 14(8) of the TAA as no evidence was provided to show the address was the current address for the Official Assignee and/or that the notices were addressed to the Official Assignee.
The Commissioner did concede that the notices of assessments for two GST periods were not sent to the Official Assignee and therefore the response period in s 89AB of the TAA had not been triggered and so any challenge under Part 8A of the TAA in respect of those assessments was premature.
The Commissioner also contended that the disputant had no standing to bring or continue the proceedings as the assessments related to property acquired by the disputant during the period of his bankruptcy as the property vested in the Official Assignee and the disputant's rights in it were extinguished.
The TRA noted that while the Commissioner made this submission, the Commissioner had still proceeded against the disputant in his personal capacity and obtained judgment against him in respect of the relevant assessments.
Tax Administration Act 1994: ss 14, 89AB, 89K and 138H