Assessments in disputed cases

2004 amendment confirms the validity of assessments made at the direction of an authorised officer and those that follow practice and policy approved by the CIR.

Section 114 of the Tax Administration Act 1994

Introduction

The validity of assessments made at the direction of an authorised officer, and those that follow practice and current policy approved by the Commissioner of Inland Revenue, has been confirmed.

Background

As part of the disputes resolution process, the documents that comprise each party's arguments are forwarded to Inland Revenue's Adjudication Unit for review. The function of the Unit, as described by Sir Ivor Richardson, is to consider the dispute impartially and independently of the audit function. 3  An amended assessment, if required, is then issued, based on this review.

Depending on the outcome of the adjudication process, a taxpayer's assessment may be amended by Inland Revenue. This involves the adjudication officer directing another officer (usually the investigating officer) to make the assessment on the grounds specified by the adjudication officer.

Administratively, it is more efficient that the investigating officer, rather than the adjudicator, makes and issues the amended notice of assessment (if required) after the adjudication division has considered the issue. All officers of the department should follow current practice directed by the Commissioner when considering the issues relating to the assessment. The amendment confirms that assessments issued by one Inland Revenue officer at the direction of another remain valid. This is necessary following a draft Crown Law opinion which had raised an issue as to whether the assessing officer's function could be fettered in such circumstances.

Key feature

Section 114 of the Tax Administration Act 1994 has been amended to confirm that assessments made at the direction of an authorised officer and assessments made following current policy or practice directed by the Commissioner are valid.

Application date

The amendment will apply from the date of enactment, 21 December 2004.


3 Organisational review of the Inland Revenue Department Report to the MInister of Revenue (and on tax policy),also to the Minister of Finance) from Organisational Review Committee April 1994, page 67.