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05 Sep 2018
Appeal Status
Not appealed

Application to extend time for SOP dismissed

Two companies were in dispute with the Commissioner of Inland Revenue concerning GST input credits and had two months to issue Statements of Position in response to the Commissioner’s SOPs.

Vicente Badillo Lopez v Commissioner of Inland Revenue [2018] NZHC 2329


Two companies were in dispute with the Commissioner of Inland Revenue (“the Commissioner”) concerning GST input credits and had two months to issue Statements of Position (“SOPs”) in response to the Commissioner’s SOPs. Vicente Lopez, the sole director and shareholder of both companies, applied in his own name to extend time for the companies to issue their SOPs. The Commissioner successfully applied to dismiss Mr Lopez’s application, both for lack of jurisdiction (the companies should have applied, not Mr Lopez) and, even if the companies had made the application, it would not have succeeded as the grounds in s 89M(11) of the Tax Administration Act 1994 (“the TAA”) for an extension of time were not met.


It is the taxpayer company, not a director or shareholder, that must apply under s 89M(11) of the TAA for an extension of time to issue a SOP.

An application for an extension of time under s 89M(11) must include an allegation that there are issues in dispute that have not been previously discussed between the Commissioner and taxpayer. Even if there is such an allegation, the Court will consider whether, factually, the issues in dispute have been previously discussed or the taxpayer has been given ample opportunity to raise and discuss any issues but has not pursued those opportunities.


The applicant, Vincente Lopez, was the sole director and shareholder of Galaxy Private Transport Ltd and Mars.XXX Ltd (“the Companies”). The Companies were in dispute with the Commissioner (GST input credits and income tax) and the Commissioner had issued SOPs to each Company respectively.

Mr Lopez applied to the High Court for a year’s extension under 89M(11) of the TAA to reply to the SOPs issued by the Commissioner, and, in the alternative, on the basis of exceptional circumstances under 89K of the TAA.

The Commissioner opposed the application on the grounds that the Court had no jurisdiction to hear and determine the application:

Mr Lopez had purported to file an originating application when he requires the Court’s leave to do so under r 19.5 of the High Court Rules (“the HCR”). Without such leave the proceeding is invalid;

The appropriate applicants are the Companies and there should be a separate application from each company, rather than a single application from Mr Lopez;

Mr Lopez, who is not a barrister or solicitor, is unable to bring an application on behalf of the companies under the Mannix rule (Re GJ Mannix Ltd [1984] 1 NZLR 309 (CA)), without leave of the Court.


The Court noted that any issues between the Commissioner and the Companies can only be resolved in proceedings to which they are parties. There is no dispute under Part 4A of the TAA between Mr Lopez and the Commissioner, rather any disputes are between the Companies and the Commissioner.

It is the Companies which must seek the extension of time and they have not done so. The proceeding does not provide a jurisdictional basis to grant an extension of time to the Companies and Mr Lopez’s application therefore failed on procedural grounds.

For completeness the Court considered the substantive merits of the extension application (putting aside that the application was made by Mr Lopez, not the Companies), with the principles relevant to a strikeout being considered. Rule 15.1(1)(a) of the HCR provides that the court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading. The Court may dismiss a proceeding on the same basis.

Under 89M(11) of the TAA an extension must be applied for before the expiry of the response period and it must have been unreasonable to respond within the response period due to there being issues not previously discussed. While Mr Lopez had filed the application before the expiry of the response period, the grounds relied on did not include an allegation that the issues in dispute were not previously discussed. Nor would such a submission, if made, appear sustainable in light of the evidence filed by the Commissioner.

There was substantial correspondence between the Inland Revenue and Mr Lopez, on behalf of the companies, and he had been given several opportunities to supply information, discuss the audits and explain what the claimed GST expenses related to; meetings had been arranged which Mr Lopez refused to attend. Input credits were allowed where clear explanations and/or verifiable proof was given of the claimed expenditure.

As Mr Lopez had had ample opportunities to raise and discuss issues in dispute with the Commissioner, but did not pursue those opportunities, the Court found that, therefore, s 89M(11) of the TAA did not appear to apply.

The Court also noted that the “exceptional circumstances” exception in s 89K of the TAA which Mr Lopez relied on did not apply as the section only becomes operative once a taxpayer (belatedly) submits a SOP to the Commissioner. As the Companies have not filed their respective SOPs they were not in the position to request the Commissioner to exercise her discretion to treat the SOPs as if they had been filed within the appropriate response period.

Accordingly, even if Mr Lopez were able to overcome the procedural obstacles, the Commissioner’s strike out application would have succeeded on substantive grounds.

The Court dismissed Mr Lopez’s application and awarded costs.

High Court Rules 2016; Tax Administration Act 1994