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01 Jul 2012

Movement of assessment function from the Adjudication Unit to the Service Delivery Group

From 1 July 2012 responsibility for making assessments in disputed cases considered by the Adjudication Unit has been shifted to the Service Delivery Group.

From 1 July 2012 the responsibility for making assessments in disputed cases that have been considered by the Adjudication Unit has been shifted to the Service Delivery Group (SDG).

Disputes come to the Adjudication Unit as part of the dispute resolution process. The Adjudication Manager previously made any necessary assessments in respect of disputed matters referred to Adjudication. The initiating entries for making the computer-generated notice of assessment were done by SDG officers based on the conclusions set out in the Adjudication report. Under the law there is a difference between the making of an assessment and giving notice of that assessment, and some tensions and ambiguities existed in respect of adjudicated disputes. An example is the potential ambiguity as to who held all the necessary information to make the final decision, with a different assessing officer from the person who formed the Commissioner's proposed adjustment, especially in light of the impact of the evidence exclusion rule (which relates to the Statement of Position). In addition, a lack of clarity sometimes arose as to the start date from which any subsequent challenge timeframes ran.

Disputes will continue to be referred to Adjudication in most cases as previously (eg, unless an exception applies in terms of s 89N(1)(c) of the Tax Administration Act 1994). The change is that the relevant SDG officer will now formally make any assessments that may be required, rather than the Adjudication Manager. This resolves the previous ambiguities and tensions, and provides more certainty as to the date from which challenge rights accrue for taxpayers. It also provides more consistency of approach between disputed and non-disputed assessments, as well as between different disputes that are resolved or assessed at different stages of the disputes process.

An important point to note is that in all cases the SDG officer making an assessment will be bound by the Adjudication Unit's conclusions and will assess in accordance with them. Section 114(b) of the Tax Administration Act 1994 ensures that this constitutes a valid assessment.

In disputes that involve a disputable decision and no assessment, the Adjudication Unit will continue to either confirm the decision or retake the decision (as necessary).

In all cases, each of the parties will still be provided with an Adjudication Report providing the full reasoning behind the decision (and which will only have a subtle difference in wording as to the decisions made). Taxpayers and practitioners will not notice any significant difference in practice.

If after referral to the Adjudication Unit the taxpayer has been unsuccessful, the two-month response period to file challenge proceedings with the Taxation Review Authority (TRA) or High Court will run from the date of the notice of assessment issued by the SDG officer (unless the taxpayer has previously been provided with a challenge notice in terms of s 89P of the Tax Administration Act 1994).