Five years on for facilitated conferences

While those familiar with working through disputes with Inland Revenue may be aware of the opportunity for a facilitated conference, many will not.

Facilitation of tax disputes conferences was introduced five years ago. It is a form of Alternative Dispute Resolution (ADR) and its introduction followed discussions with the New Zealand Law Society and the New Zealand Institute of Chartered Accountants on their joint submission to the Minister of Revenue recommending reforms to the disputes resolution and challenge procedures.

New Zealand's disputes process, unlike most overseas tax jurisdictions, takes place pre assessment, ie, before Inland Revenue makes any amendment to a taxpayer's self-assessment. Facilitated conferences occur in the middle of the disputes process, after an initial formal exchange of information between the parties through a notice of proposed adjustment and a notice of response, and before the final formal exchange of information through statements of position which ultimately defines the dispute between the parties. At this stage, the dispute will be reviewed (on the papers) by Inland Revenue's Disputes Review Unit, who are independent and separate from others involved in the dispute.

Facilitated conferences are open to all in the disputes process. It provides an opportunity to try and resolve differences in the understanding of the facts, the law and the arguments being put forward by both parties through the involvement of an independent internal facilitator. The facilitator does not have any formal decision making powers but works with the parties to seek resolution. If appropriate, the facilitator can assist the parties to hold settlement discussions but this will be separate from any facilitated conference.

Five years on, over 500 facilitated conferences have been held, with over half that number occurring in the last two years. Around 55% of all facilitated conferences achieved resolution of the dispute.

Conference facilitators are senior, experienced, Inland Revenue officers who have had no prior involvement with the dispute and who, as such, will generally be from another regional office and/or business area. Training for facilitators is provided by the Arbitrators and Mediators Institute of New Zealand Inc (AMINZ). Inland Revenue has a pool of 40 to 50 trained facilitators.

New Zealand is not the only country to adopt the use of independent internal facilitators as a form of alternative disputes resolution. Since the introduction in New Zealand, both Australia and the United Kingdom Revenue Authorities have piloted similar approaches in dealing with targeted areas of disputes before making it more generally available.

Inland Revenue remains committed to facilitated conferences and the benefit they can provide to all involved. To provide greater external assurance as to the expertise of the facilitators used, Inland Revenue is now moving to accredit its facilitators with AMINZ. In addition, to assist people with a broader understanding of the disputes process, Inland Revenue is updating the information on its website and will be producing a short video on the process and how it works.

This article by Karen Whitiskie appeared in the Tax Information Bulletin Vol 27, No 10 (November 2015) and was previously published in Lawtalk, 873, 11 September 2015, p 19.