Disputes resolution process commenced by the Commissioner of Inland Revenue (Apr 05) (WITHDRAWN)

  Introduction

1. This Standard Practice Statement outlines the Commissioner's rights and responsibilities with a taxpayer in respect of an adjustment to a tax liability when the Commissioner commences the disputes resolution process.
   
   
2. Where the taxpayer commences the disputes resolution process, the Commissioner's practice is stated in SPS 05/04 - Disputes resolution process commenced by a taxpayer.
   
   
3. This Standard Practice Statement consolidates all previous Standard Practice Statements and practices and has been updated for recent changes to the law in the Taxation (Venture Capital and Miscellaneous Provisions) Act 2004. The Commissioner regards this Standard Practice Statement as a reference guide for taxpayers and officers of Inland Revenue. The practices outlined will be followed by officers of Inland Revenue.

 Application

4. This Standard Practice Statement applies to disputes commenced on or after 1 April 2005 and replaces the following Standard Practice Statements (these, as revised from time to time, will continue to apply to disputes commenced prior to 1 April 2005):
   
   
   • INV-150 Content standards for Notice of Proposed Adjustment and Notice of Response published in Tax Information Bulletin Vol 11, No 6 (July 1999); and
     
     
   • INV-170 Timeliness in resolving tax disputes published in Tax Information Bulletin Vol 14, No 2 (February 2002).
   
   
   
5. Unless specified otherwise, all legislative references in this Standard Practice Statement are to the Tax Administration Act 1994.

 Background

6. The aim of the disputes resolution process is to resolve disputes over tax liability in a fair, effective and timely manner. The disputes resolution process is designed to encourage an "all cards on the table" approach and the resolution of issues without the need for litigation. It ensures that all the relevant evidence, facts, and legal arguments are canvassed before a case goes to court.
   
   
7. The disputes resolution process was introduced in 1996. A review of the procedures was carried out in July 2003. Amendments have recently been made to the process to improve the framework within which tax disputes are resolved.
   
   
8. In accordance with the objectives of the disputes resolution process, the Commissioner (unless a legislated exception applies) must go through the disputes resolution process before the Commissioner can issue an assessment.
   
   
9. The early resolution of a dispute is intended to be achieved through a series of steps prescribed in legislation, the main elements of which are:
   
   
   • A notice of proposed adjustment: this is a notice by either the Commissioner or a taxpayer to the other that an adjustment is sought in relation to the taxpayer's self-assessment, the Commissioner's assessment or a disputable decision.
     
     
   • A notice of response: this is issued by the party receiving the notice of proposed adjustment with which they disagree.
     
     
   • A disclosure notice and statement of position: a disclosure notice triggers the issue of a statement of position. A statement of position contains an outline of facts and propositions of law with sufficient details to support the position taken. A statement is issued by each party. It is an important document because it limits facts and propositions of law which can be relied on (by either party) if the case goes to court.
   
   
   
10. There are also two administrative phases in the process - the conference and adjudication phases. The conference can be formal or informal discussion between Inland Revenue and the taxpayer, to clarify and, if possible, resolve the issues. Adjudication involves the independent consideration of the dispute by Inland Revenue and is the final phase in the process before the taxpayer's assessment is amended (if it is to be amended), and follows the exchange of statements of position. If the dispute has not been already resolved, the Commissioner's practice will be to hold conferences, and refer the dispute to the Adjudication Unit, except in rare circumstances.

Standard Practice and Analysis

Contents

Disputes resolution process commenced by the Commissioner of Inland Revenue

 

 

Heading	Paragraph or appendix
Introduction	1
Application	4
Background	6
Standard Practice and Analysis
Notice of proposed adjustment:
The Commissioner must issue a notice of proposed adjustment before making an assessment of tax	11
Exceptions under section 89C	14
Taxpayer may dispute an assessment when the assessment is issued without a notice of proposed adjustment	58
Issuing a notice of proposed adjustment by the Commissioner	61
Exceptions to the statutory time bar	67
Limitations on the Commissioner issuing a notice of proposed adjustment	75
Contents of the Commissioner's notice of proposed adjustment	80
Identify adjustments or proposed adjustments	88
State the facts and the law	92
How the law applies to the facts	97
Timeframes to complete the disputes resolution process	99
Exceptions - when an assessment can be issued without completing the disputes resolution process	103
Application of the exceptions in section 89N	140
Notice of response:
Taxpayer's response to the Commissioner's notice of proposed adjustment: notice of response	142
Deemed acceptance	147
Exceptional circumstances under section 89K	148
Receipt of a taxpayer's notice of response	155
Deficiencies in the contents of a notice of response	161
Conference:
Conduct of a conference	163
Legal and other advisers attending a conference	166
Conference not held or abridged	167
Disclosure notices:
General rules	171
Evidence exclusion rules	175
Issue of a disclosure notice	177
Statement of position:
General rules	180
Contents of a statement of position	182
Receipt of taxpayer's statement of position	189
The Commissioner's reply	194
Agreement to include additional information	197
Preparation for adjudication	202
Adjudication decision	211
Indicative administrative timeframes	Appendix 1

The disputes resolution process is set out in the following diagram. Click on the image to make it bigger.

 The Commissioner must issue a notice of proposed adjustment before making an assessment of tax

11. Before making an assessment of tax, including shortfall penalties (but excluding interest and civil penalties that are not shortfall penalties) the Commissioner must issue a notice of proposed adjustment ("NOPA"), unless an exception to the requirement for issuing a NOPA under section 89C applies.
    
    
12. Nevertheless, even if the Commissioner, in a very unlikely event, made an assessment in breach of section 89C, the assessment would be regarded as valid under section 114.
    
    
13. Each exception may apply independently or together depending on the circumstances. The Commissioner may choose to issue a NOPA whether an exception applies or not.

 Exceptions

Exception 1: The assessment corresponds with a tax return

14. Section 89C(a) states:

    The assessment corresponds with a tax return that has been provided by the taxpayer

15. If there is no difference between the assessment and the return, then there is no dispute and therefore no need for the dispute resolution process. In this circumstance an assessment may be issued by the Commissioner without first issuing a NOPA.
    
    
16. Sometimes, there is a deficiency in the taxpayer's return, and the Commissioner needs to generate an assessment. For example, the Commissioner may issue an assessment, where the taxpayer has provided all the income details but omitted to calculate the income tax liability in the return.

Exception 2: Simple or obvious mistake or oversight

17. Section 89C(b) states:

    The taxpayer has provided a tax return which, in the Commissioner's opinion, appears to contain a simple or obvious mistake or oversight, and the assessment merely corrects the mistake or oversight.

18. This exception is designed to cover simple calculation errors or oversights generally picked up by Inland Revenue's processing centres with computer edits and simple return checks. This maintains the status quo for the many assessments arising in this situation.
    
    
19. The Commissioner will generally treat the following as simple mistakes or oversights:
    • arithmetical errors
    • transposition of numbers from one box to another in a tax return
    • double counting, such as inadvertently including in the taxpayer's income the same item twice
    • when a rebate has not been claimed which the taxpayer is entitled to or was incorrectly calculated, e.g. low income rebate for taxpayers who earn less than $38,000 in an income year.
    
    
    
20. There is no dollar limit to what is "a simple or obvious mistake or oversight" and this may be ascertained on a case by case basis. Where the Commissioner issues an assessment to correct a taxpayer's simple or obvious mistake or oversight, the Commissioner may consider imposing shortfall penalties on the taxpayer, provided that there is a tax shortfall and the taxpayer has committed one of the culpable acts, e.g. lack of reasonable care.
    
    
21. However, "a simple or obvious mistake or oversight" will not include the situation where a taxpayer takes a tax position as a result of:
    • A new, beneficial interpretation or favourable new case law; or
    • A change of mind (e.g. a taxpayer changes their mind to claim tax depreciation on an asset, while their previous tax position was to elect that asset to not be depreciable property.)

Exception 3: Agreement to amend a previous tax position

22. Section 89C(c) states:

    The assessment corrects a tax position previously taken by the taxpayer in a way or manner agreed by the Commissioner and the taxpayer

23. This situation may arise where either the taxpayer or the Commissioner raises the issue. As no dispute arises, there is no need to issue a NOPA.
    
    
24. Where the proposed adjustment is raised by an Inland Revenue officer, this exception will not be used unless the taxpayer accepts the adjustment. For the purpose of section 89C(c), the agreement between the Commissioner and the taxpayer can be oral or in writing, though the Commissioner's practice will generally be to seek an agreement in writing. The section applies if Inland Revenue officers can demonstrate that an agreement on the proposed adjustment has been reached between the Commissioner and the taxpayer.
    
    
25. However, it is important to note that if the Commissioner and the taxpayer agree on an adjustment and some other adjustments are still subject to a dispute, the Commissioner must not issue an assessment on the basis of the agreed adjustment.
    
    
26. Where a taxpayer proposes an adjustment outside the disputes resolution process and the Commissioner agrees, the particulars will be recorded in writing and must state that the assessment is made in terms of the Commissioner's practice on exercising the discretion under section 113. (The Commissioner's practice in relation to section 113 is stated in a separate Standard Practice Statement.) Shortfall penalties, if applicable, must also be considered.

Exception 4: The assessment otherwise reflects an agreement

27. Section 89C(d) states:

    The assessment reflects an agreement reached between the Commissioner and the taxpayer

28. The same procedures apply here as for section 89C(c). The agreement reached between the Commissioner and the taxpayer can relate to matters other than a tax position previously taken by the taxpayer. For example, the taxpayer has disputed but now agrees that they are a "taxpayer" for the purpose of the definition in section OB 1 of the Income Tax Act 2004. Due to this agreement, the Commissioner issues an assessment to the taxpayer.

Exception 5: Material facts and law identical to court proceeding

29. Section 89C(db) states:

    The assessment is made in relation to a matter for which the material facts and relevant law are identical to those for an assessment of the taxpayer for another income year that is at the time the subject of court proceedings

30. This exception applies where a dispute relates to a later income year in which the material facts and issues are the same as an earlier dispute that has been through the disputes resolution process and is the subject of court proceedings. Pursuant to section 89C(db), the Commissioner may issue an assessment to the taxpayer in relation to the later income year, without first issuing a NOPA. As the issues in dispute will be resolved by the Court it is unnecessary to go through the disputes resolution process in respect of the same issue in the later income year.
    
    
31. However, the taxpayer, who has been issued an assessment in relation to the later income year under section 89C(db), is not precluded from disputing that assessment.
    
    
32. This provision is intended to reduce compliance costs. Despite section 89C(db), the Commissioner may choose to issue a NOPA in relation to the later income year and endeavour to resolve the dispute via the disputes resolution process.

Exception 6: Revenue protection

33. Section 89C(e) states:

     

    The Commissioner has reasonable grounds to believe a notice may cause the taxpayer or an associated person -

    1. To leave New Zealand; or
    2. To take steps, in relation to the existence or location of the taxpayer's assets, making it harder for the Commissioner to collect the tax from the taxpayer

34. This exception is designed to ensure protection of the revenue in the relevant circumstances. Exercise of this exception could be supported by evidence of the "reasonable grounds" relied on (e.g. the taxpayer's correspondence with third parties, the taxpayer's application for emigration to another country, interviews with the taxpayer, etc.)

Exception 7: Taxpayer may be involved in fraudulent activity and may have left New Zealand

35. Section 89C(eb) states:

    The Commissioner has reasonable grounds to believe that the taxpayer has left New Zealand and may have been involved in fraudulent activity

36. This exception is an extension of the exception under section 89C(e) allowing the Commissioner to issue an assessment if he has reasonable grounds to believe that the taxpayer has left New Zealand and may have been involved in fraudulent activity.
    
    
37. Exercise of this exception would be supported by evidence of the "reasonable grounds" relied on.

Exception 8: Vexatious or frivolous

38. Section 89C(f) states:

    The assessment corrects a tax position previously taken by a taxpayer that, in the opinion of the Commissioner is, or is the result of, a vexatious or frivolous act of, or vexatious or frivolous failure to act by, the taxpayer

39. Exercise of this exception would be supported by documentation of:
    • the action, or lack of action, giving rise to the tax position previously taken (action or inaction subsequent to taking the tax position do not qualify), and
    • why that action is considered vexatious or frivolous, and shortfall penalty/prosecution consideration. Examples of a tax position as a result of a vexatious or frivolous act are:
      • Lacking in substance - the taxpayer continues to take the same position which had previously been finalised; or
      • Motivated by the sole purpose of delay.
    
    
    
40. Where this exception applies, shortfall penalties will need to be considered in respect of the taxpayer's tax position resulting from a vexatious or frivolous act.

Exception 9: TRA or court determination

41. Section 89C(g) states:

    The assessment is made as a result of a direction or determination of a court or the Taxation Review Authority

42. The direction or determination for the purpose of section 89C(g) includes court decisions for the particular taxpayer in relation to a specific tax period, and court decisions on "test cases" that apply to the taxpayer. This exception does not apply, where a taxpayer has taken a similar tax position as that taken by another taxpayer, in respect of whom a judgment has been issued and the case involved is not a "test case" that applies to the first-mentioned taxpayer.
    
    
43. A copy of the direction or determination must be retained by the Commissioner to support application of this exception. Assessments to be made, including imposition of shortfall penalties, in these circumstances will generally be completed within two weeks of receipt by Inland Revenue of the written direction or determination.

Exception 10: "Default assessments"

44. Section 89C(h) states:

    The taxpayer has not provided a tax return when and as required by a tax law

45. An assessment may be made and/or amended without issuing a NOPA where a taxpayer fails to furnish a tax return (commonly known as a "default assessment").
    
    
46. Where a taxpayer wants to dispute a default assessment through the disputes resolution process, the taxpayer must, within the applicable response period (i.e. 4 months from the date of issue of the default assessment):
    • File a tax return in the prescribed form for the period to which the default assessment relates (refer to section 89D(2) and in the case of GST, refer to section 89D(2C)); and
    • Issue a NOPA to the Commissioner in respect of the default assessment.
    
    
    
47. The taxpayer's right to dispute a default assessment is dependent upon the taxpayer first satisfying their statutory obligation to file a tax return. In the case of a default assessment, the requirement to furnish a tax return is an additional requirement of the disputes resolution process. This ensures that all taxpayers have provided the information required by tax law before they are entitled to dispute an assessment. (Note that a taxpayer cannot dispute a "default assessment" unless the two requirements as set out in paragraph 46 of this Standard Practice Statement are met.)
    
    
48. On receipt of the taxpayer's tax return for the default assessment period, the Commissioner may decide not to amend the default assessment on the basis of that tax return, if the Commissioner considers that the taxpayer's tax position is, for example, incorrect or a result of a vexatious or frivolous act.
    
    
49. Where an amended assessment has been issued on the basis of the taxpayer's tax return, the Commissioner is not prohibited from conducting further investigation on that assessment, and if necessary, issuing a NOPA to the taxpayer.

Exception 11: Failure to make or account for a deduction

50. Section 89C(i) states:

    The assessment is made following the failure by a taxpayer to make a deduction required to be made by a tax law or to account for a deduction in the manner required by a tax law

51. This exception is designed to address the situation of PAYE, non-resident contractors withholding tax, resident withholding tax ("RWT") and other tax deductions not deducted, and/or not accounted for to the Commissioner.
    
    
52. This exception will not be applied where there is an issue of interpretation (e.g. whether a particular item attracts liability for RWT) and/or shortfall penalties.

Exception 12: Non assessed returns

53. Section 89C(j) states:

    The taxpayer is entitled to issue a notice of proposed adjustment in respect of a tax return provided by the taxpayer, and has done so

54. Where the taxpayer commences the disputes resolution process and the Commissioner agrees with the taxpayer's proposed adjustments, the Commissioner may issue an assessment without first issuing a NOPA. This exception will not extend to adjustments not proposed by the taxpayer in their NOPA.

Exception 13: Consequential adjustments

55. Section 89C(k) states:

    The assessment corrects a tax position taken by the taxpayer or an associated person as a consequence or result of an incorrect tax position taken by another taxpayer, and, at the time the Commissioner makes the assessment, the Commissioner has made, or is able to make, an assessment for that other taxpayer for the correct amount of tax payable by that other taxpayer

56. Where a transaction affects more than one taxpayer, whether in the same way or in connected but opposite ways, the Commissioner may reassess all affected parties once an assessment has been issued, or may be issued, to one of the parties. There must be a direct consequential link between the parties before a consequential adjustment can be made. For example:
    • Group loss offsets - if a loss company has claimed losses to which it is not entitled and the Commissioner has amended the assessment of the loss to disallow those losses, the Commissioner may issue a separate assessment to the profit company, which has incorrectly offset the losses of the loss company against its profits.
      
      
    • GST - The supplier and the recipient of a supply have incorrectly assumed a transaction was exempt from GST. The Commissioner subsequently agrees that the recipient of the supply was entitled to GST input tax credits. Then, the Commissioner may issue an assessment to the supplier requiring the supplier to account for output tax on the value of the supply.
    
    
    
57. However in practice the Commissioner may issue a NOPA to all the taxpayers affected in such a case.

 Taxpayer may dispute an assessment when the assessment is issued without a NOPA

58. The Commissioner can issue an assessment without first issuing a NOPA under section 89C. (Note that even if the Commissioner, in a very unlikely event, made an assessment in breach of section 89C, the assessment would be regarded as valid under section 114.) Where an assessment is issued by the Commissioner without first issuing a NOPA, the taxpayer may dispute the assessment through the disputes resolution process (Refer to SPS 05/04 - Disputes resolution process commenced by a taxpayer).
    
    
59. However, where a NOPA has been issued by the Commissioner to a taxpayer and there is a written agreement from the taxpayer accepting the proposed adjustment or if there is deemed acceptance, then the assessment is not subject to challenge (refer to section 89I).
    
    
60. It is important to note that section 89I does not apply when the Commissioner and a taxpayer have reached an agreement on an adjustment prior to entering into the disputes resolution process. The taxpayer may dispute the amended assessment, despite the previous agreement.

 Issuing a NOPA by the Commissioner

61. Section 89B specifies when the Commissioner may issue a NOPA.
    
    
62. Section 89B states:

    1. The Commissioner may issue one or more notices of proposed adjustment in respect of a tax return or an assessment.
    2. The Commissioner may issue one notice of proposed adjustment in relation to more than one return period, if, in the Commissioner's opinion, -
       1. The adjustments proposed to each tax return or assessment for the return periods relate exclusively to the same issues or arrangements; or
       2. The adjustments proposed to each tax return or assessment for the return periods relate substantially to the same issues, and the issue of one notice is likely to expedite the issue of the assessments for all of the returns.
    3. The Commissioner may issue a notice of proposed adjustment in relation to more than one return period, more than one issue, and more than one tax type.

63. The Commissioner may issue one NOPA for multiple issues, multiple tax types and multiple periods. Alternatively, the Commissioner may issue more than one NOPA for the same issue and period, consistent with the duty to correctly make the assessment within the four-year statutory time period.
    
    
64. In an investigation situation, the intended approach will be discussed with the taxpayer. Where the Commissioner intends to issue a NOPA to a taxpayer, the actioning officer will usually advise the taxpayer of this intended approach within 7 days before the date of issuing the NOPA. However, the advice may be given to the taxpayer earlier. Most issues related to the same period and tax type should be kept together in the dispute. The Commissioner may also exercise his statutory powers (e.g. issue section 17 notices) after the commencement of the dispute and will continue to investigate the facts relating to the dispute.
    
    
65. It is the Commissioner's practice that if the Commissioner and the taxpayer agree upon some proposed adjustments and dispute others for the same tax period and tax type, the Commissioner will not issue an assessment on the agreed adjustments until all the disputed issues are resolved (including where the Commissioner does not pursue the disputed issues further) or the Adjudication Unit has determined them. That is, the Commissioner will not issue "partial" or "interim" assessments. However, where the statutory time bar is about to fall due, the Commissioner may issue an assessment on both the agreed adjustments and the proposed adjustments in dispute, provided the requirements in section 89N are met.
    
    
66. Where it is practicable, Inland Revenue officers will contact the taxpayer or their tax agent within 10 working days of the issue of the NOPA to ensure that the NOPA has been received. Where the contact is in writing, Inland Revenue officers should comply with section 14. For example, the taxpayer is deemed to have received the written notice if that notice has been sent by post to their usual place of abode or business.

 Exceptions to the statutory time bar

(a) Time bar waiver

67. Where it is contemplated that the disputes resolution process may not be completed before the expiry of the statutory time bar period, the Commissioner and the taxpayer may agree in writing to waive the statutory time bar by up to 12 months in order to allow the full disputes resolution process to be applied (section 108B(1)(a)).
    
    
68. The taxpayer may also give written notice to the Commissioner and waive the time bar for a further 6 months from the end of the 12-month period. The taxpayer may do so to allow sufficient time for the dispute to go through the adjudication process.
    
    
69. The taxpayer must be informed in writing that:
    • a NOPA will be issued, and
    • the disputes resolution process will be followed.
70. Note that to be effective a waiver of statutory time bar must be agreed in writing on the prescribed Notice of waiver of time bar (IR775 ) form.
    
    
71. The waiver of statutory time bar only applies to issues that have been identified and known to the taxpayer and the Commissioner before the original statutory time bar. Other issues that have not been identified will still be subject to the original statutory time bar, except where section 108(2) or 108A(3) applies. (Please refer to paragraph 76 of this Standard Practice Statement)

(b) The Commissioner's application to the High Court under section 89N(3)

72. Where a NOPA has been issued and the disputes resolution process cannot be completed before the expiry of the statutory time bar period, the Commissioner may apply to the High Court for more time to complete the process (refer to section 89N(3) as discussed later in this Standard Practice Statement).
73. However, where a matter in dispute has been submitted to the Adjudication Unit and the Adjudication Unit does not have sufficient time (i.e. before the expiry of the statutory time bar or further time allowed by the waiver under section 108B(1)) to fully consider the matter, then the Adjudication Unit will return the matter to the actioning officer to make a decision as to whether an assessment should be issued or whether to accept the taxpayer's position. (In short the Commissioner may amend an assessment at any time after the Commissioner has considered the taxpayer's statement of position in relation to the particular period.)

(c) Exceptions under section 89N(1)

74. Where a NOPA has been issued, the Commissioner will follow the disputes resolution process (refer to paragraphs 101 and 102 of this Standard Practice Statement), unless one of the exceptions in section 89N applies (the application of section 89N is discussed in detail later). Administrative approval must be obtained and documented for any departure from the full disputes resolution process.

 Limitations on the Commissioner issuing a NOPA

75. The Commissioner may not issue a NOPA where the proposed adjustment is the subject of a challenge or after the expiry of the statutory time bar. Section 89B(4) states:

    The Commissioner may not issue a notice of proposed adjustment -
    (a) If the proposed adjustment is already the subject of a challenge; or
    (b) After the expiry of the time bar that, under -

    1. Sections 108 and 108B; or
    2. Sections 108A and 108B, applies to the assessment.

76. The exceptions to the statutory time bar, as set out in sections 108 and 108A, include:
    • The taxpayer provides a fraudulent or wilfully misleading return (section 108(2)); or
    • The taxpayer has knowingly or fraudulently failed to make a full and true disclosure for determining their GST payable (section 108A(3)).
77. The Commissioner is generally limited to a four-year period within which to increase a taxpayer's assessment following an investigation or in certain other circumstances. In the case of a dispute, the assessment is amended following the process for resolving disputes. The various steps involved in the process would be undertaken within the four-year period.
    
    
78. It should be noted that paragraph (a) of section 89B(4) applies to individual proposed adjustments. Where the proposed adjustment is the subject of a court proceeding, the Commissioner cannot issue a NOPA on that proposed adjustment. However, separate NOPAs may be issued to the taxpayer in relation to the same tax period so long as they relate to different adjustments.
    
    
79. For example, a taxpayer challenges the deductibility of feasibility expenditure in the 2004 income year pursuant to section 138B. The Commissioner can issue a NOPA to the same taxpayer in relation to the tax treatment of bad debts in the same income year.

 Contents of the Commissioner's NOPA

80. A NOPA is the document that commences the disputes resolution process. It is intended to explain in a legal/technical manner what the position of the issuer is in relation to the proposed adjustments. The contents of a NOPA issued by the Commissioner are prescribed in sections 89F(1) and (2).
    
    
81. Section 89F states:

    (1) A notice of proposed adjustment must-

    1. contain sufficient detail of the matters described in subsections (2) and (3) to identify the issues arising between the Commissioner and the disputant; and
    2. be in the prescribed form.

    (2) A notice of proposed adjustment issued by the Commissioner must-

    1. identify the adjustment or adjustments proposed to be made to the assessment; and
    2. provide a concise statement of the key facts and the law in sufficient detail to inform the disputant of the grounds for the Commissioner's proposed adjustment or adjustments; and
    3. state how the law applies to the facts.

82. A NOPA must be in the prescribed form. A NOPA issued by the Commissioner is required to identify in sufficient detail the adjustments proposed and state concisely the facts and law relevant to the adjustment and how the law applies to the facts.
    
    
83. The law requires a "concise" statement of the key facts and the law in sufficient detail. The terms "concisely" and "sufficient detail" mean that the document is relatively brief but at the same time is detailed enough to explain all the issues relevant to the dispute.
    
    
84. The Commissioner will identify (but not set out in full) relevant legislation and legal principles derived from leading cases. These references should be in sufficient detail to make clear the grounds for the proposed adjustment. Lengthy quotations from cases will be avoided.
85. The Commissioner believes that Inland Revenue has a statutory obligation to inform taxpayers adequately, and recognises that the matters relevant to the dispute will be set out in greater detail at the statement of position phase. In keeping with that obligation, Inland Revenue will always attempt to issue a NOPA which has sufficient details and is of a high standard. A frank and complete exchange of information by both parties is implicit in the spirit and intent of the disputes resolution process.
    
    
86. However, the Commissioner's practice will be to ensure that the NOPA is, within those limits, as brief as practicable.
    
    
87. The content of a NOPA issued by the Commissioner must satisfy all the requirements in section 89F(2)(a), (b) and (c).

 Identify adjustments or proposed adjustments - Section 89F(2)(a)

88. This includes for each proposed adjustment:
    • the income year or tax period to which the proposed adjustment relates, and
    • a comment as to whether use of money interest will apply, and
    • details of any shortfall penalty and any other appropriate penalties of a lesser percentage as alternative arguments - where sufficient admissible evidence is held to support imposition and where such a penalty is justified (by reference to any relevant guidelines).

Shortfall penalties

89. Note that shortfall penalties are a separate item of adjustment and must be explained and supported in the same manner as the underlying tax shortfall.
    
    
90. Where there is sufficient evidence to show that shortfall penalties should be imposed, then the shortfall penalties would ordinarily be included in the same NOPA as the substantive issues. This practice ordinarily applies, unless one of the following exceptions applies:
    • Where evidence for the imposition of shortfall penalties does not become available until after the NOPA on the substantive issues has been issued. In such circumstances a NOPA may be issued separately for the shortfall penalty at a later stage.
    • Where, prior to entering into the disputes resolution process, a taxpayer has accepted the proposed adjustment in relation to the substantive issues, but has not accepted the imposition of the shortfall penalties, then a NOPA may still be issued by the Commissioner to the taxpayer for the proposed penalties.
    • Where the Commissioner receives a voluntary disclosure of the substantive issues from a taxpayer and the only disputed issue is the imposition of shortfall penalty.
    • Where prosecution action is being considered and shortfall penalties apply because the taxpayer has committed one of the culpable acts (e.g. evasion), the Commissioner must impose a shortfall penalty.
      
      Under section 149, where a shortfall penalty has been imposed, the Commissioner may not subsequently prosecute the taxpayer for taking the incorrect tax position. Therefore, if prosecution is being considered as an option, a proposed imposition of a shortfall penalty in a NOPA may (if subsequently imposed) prevent the Commissioner from prosecuting the taxpayer.
      
      A shortfall penalty may be imposed subsequent to the prosecution.
    
    
    
91. Note that if shortfall penalties are not proposed in a NOPA, the Commissioner cannot propose them at the statement of position phase without first issuing a NOPA in respect of the penalties.

 State the facts and the law - Section 89F(2)(b)

Facts

92. A concise statement of facts means focusing on material factual matters relevant to the legal issues. This includes for each proposed adjustment the facts relevant to proving all arguments raised in support of the adjustment, including any facts which are inconsistent with any argument previously raised by the taxpayer.
    
    
93. Care should be taken to state all the material facts in brief, so as to avoid irrelevant detail or repetition. For example, where the background to the disputed issues is known to both the Commissioner and the taxpayer, Inland Revenue officers may only need to include a summary of the facts in the NOPA. Where possible, the Commissioner will refer to and/or append any document which has previously set out the facts on which the Commissioner relies.
    
    
94. While every attempt will be made to be concise in the Commissioner's NOPA, it will sometimes be necessary to have a more detailed explanation of the material facts, depending on the complexity of the issue.

Law

95. A concise statement of the law refers to an outline of the relevant legislative provisions and principles derived from leading cases, affecting the proposed adjustment.
    
    
96. For example, it is sufficient for the Commissioner to explain the nature of the legal arguments, without quoting from case law in a lengthy manner.

 How the law applies to the facts - Section 89F(2)(c)

97. The legal arguments must be applied to the facts to ensure that the proposed adjustments are not statements which appear out of context. The application of the law to the facts must logically support the proposed adjustment and must be stated concisely.
    
    
98. The Commissioner will outline all materials and arguments (including alternative arguments) on which it is intended to rely. If more than one argument supports the same or similar outcome, all arguments will be referred to in the NOPA.

 Timeframes to complete the disputes resolution process

99. Once the disputes resolution process has commenced (i.e. where a NOPA has been issued by the Commissioner to a taxpayer and the dispute has not been resolved by agreement between the taxpayer and the Commissioner), where practicable, a time line should be negotiated between the taxpayer and Inland Revenue officers involved to ensure timely and efficient progression of the dispute.
    
    
100. Negotiating time lines for the timely resolution of disputes is an administrative practice encouraged by the Commissioner. Inland Revenue officers and taxpayers should endeavour to meet the agreed time lines. Where the negotiated time line cannot be achieved, this will be discussed with the taxpayer with a view to agreeing a new time line. However, failure to negotiate an agreed time line or adhere to the agreed time line will not prevent a case from progressing through the disputes resolution process.
     
     
101. In addition to the above administrative practice, the Commissioner is bound by section 89N. The law requires that where the Commissioner and the taxpayer cannot agree on the proposed adjustments, the Commissioner cannot amend an assessment without completing the disputes resolution process, unless one of the exceptions in section 89N applies.
     
     
102. Although the adjudication process is not legislated as part of the disputes resolution process, it is the Commissioner's administrative practice to go through the adjudication process for the purpose of resolving a dispute after the statements of position phase, where practicable. However, where the adjudication process cannot be completed (e.g. because the statutory time bar is imminent), the Commissioner can amend an assessment, provided that the taxpayer's statement of position has been considered. This means that Inland Revenue officers should act in good faith and genuinely consider the facts and legal arguments in the taxpayer's statement of position before deciding whether to amend an assessment.

 Section 89N - exceptions when an assessment can be issued without completing the disputes resolution process

103. Where a NOPA has been issued and the dispute has not been resolved between the Commissioner and the taxpayer, the Commissioner can issue an assessment without completing the disputes resolution process under the following circumstances:

Exception 1: In the course of the dispute, the taxpayer has, in the Commissioner's opinion, committed an offence under an Inland Revenue Act that has had the effect of delaying the completion of the disputes resolution process (section 89N(1)(c)(i)).

104. Section 89N(1)(c)(i) states:

     (i) the Commissioner notifies the disputant that, in the Commissioner's opinion, the disputant in the course of the dispute has committed an offence under an Inland Revenue Act that has had an effect of delaying the completion of the disputes process:

105. The exception applies where the Commissioner may need to act quickly to issue an assessment where the taxpayer commits an offence under an Inland Revenue Act and causes undue delay in a dispute.
106. For example, in the course of a dispute, a taxpayer obstructed Inland Revenue officers in obtaining information from the taxpayer's business premise under section 16. The Commissioner advised the taxpayer in writing that in the Commissioner's opinion, the taxpayer has committed an offence under section 143H. As the offence has the effect of delaying the completion of the disputes resolution process, the Commissioner is not required to complete the process and may amend the taxpayer's assessment under section 89N(2).
     
     
107. This exception may apply if a taxpayer, in the course of a dispute, wilfully refuses to attend an inquiry under section 19 on the specified date in the Commissioner's notice. The Commissioner can advise the taxpayer in writing that in the Commissioner's opinion, the taxpayer has committed an offence under section 143F and that this has the effect of delaying the completion of the disputes resolution process. If so, the Commissioner may amend the taxpayer's assessment under section 89N(2) without completing the disputes process.

Exception 2: A taxpayer involved in a dispute, or an associated person of the taxpayer, may take steps to shift, relocate or dispose of their assets to avoid or delay the collection of tax, and the issue of an assessment becomes urgent (section 89N(1)(c)(ii) and (iii)).

108. If the Commissioner has reasonable grounds to believe that a taxpayer or an associated person of the taxpayer seeks to dispose of assets which may be required to meet an outstanding tax liability, the Commissioner may issue an assessment to the taxpayer. Sections 89N(1)(c)(ii) & (iii) state:

     (ii) the Commissioner has reasonable grounds to believe that the disputant may take steps in relation to the existence or location of the disputant's assets to avoid or delay the collection of tax from the disputant:
     
     (iii) the Commissioner has reasonable grounds to believe that a person who is, under section OD 8(3) of the Income Tax Act 2004, an associated person of the disputant may take steps in relation to the existence or location of the disputant's assets to avoid or delay the collection of tax from the disputant:

109. The purpose of the provisions is to address situations where a taxpayer or an associated person of the taxpayer seeks to dispose of assets which may be required to meet an outstanding tax liability or a pending liability, and the issue of an assessment becomes urgent.
     
     
110. The above exceptions apply if the taxpayer sought to avoid or delay the payment of tax by taking steps in relation to the existence or location of the taxpayer's assets.
     
     
111. In order to issue an assessment on the basis of the above exception, Inland Revenue officers must record any relevant correspondence and evidence (e.g. the directors' written instructions to shift the taxpayer's assets overseas, evidence of electronic wiring of funds to overseas countries, transcripts of interviews with the taxpayer, etc), or other grounds for the reasonable belief.

Exception 3: The taxpayer involved in a dispute has begun judicial review proceedings in relation to the dispute or an associated person of the taxpayer involved in another dispute involving similar issues has begun judicial review proceedings (section 89N(1)(c)(iv) & (v)).

112. Sections 89N(1)(c)(iv) and (v) state:

     4. the disputant has begun judicial review proceedings in relation to the dispute:
        
     5. a person who is, under section OD 8(3) of the Income Tax Act 2004, an associated person of the disputant and is involved in another dispute with the Commissioner involving similar issues has begun judicial review proceedings in relation to the other dispute:

113. This exception applies to all judicial review proceedings brought against the Commissioner. In judicial review proceedings, the resources of the Commissioner and the taxpayer are likely to be directed away from progressing the dispute through the disputes resolution process.
     
     
114. Section 89N(1)(c)(v) applies if all of the following requirements are met:
     • A taxpayer is involved in a dispute with the Commissioner.
     • An associated person of the taxpayer is involved in a separate dispute, which concerns similar issues as those in the dispute between the taxpayer and the Commissioner.
     • The associated person of the taxpayer has commenced judicial review proceedings in relation to their dispute.
     
     
     
115. For the purpose of section 89N(1)(c)(v), the associated person of the taxpayer is not involved in similar issues as the taxpayer when the issues are of different revenue types. For example, the dispute between the Commissioner and the taxpayer relates to PAYE issues, whereas the dispute between the Commissioner and the associated person of the taxpayer relates to income tax.
     
     
116. Even if the two disputes relate to the same revenue type, section 89N(1)(c)(v) may not apply in some circumstances. For example, the dispute between the Commissioner and the taxpayer relates to the tax treatment of entertainment expenditure, whereas the dispute between the Commissioner and the associated person of the taxpayer relates to the capital and revenue distinction of merger expenditure. The Commissioner will not regard these two disputes as involving similar issues.

Exception 4: The taxpayer fails to comply with a statutory request for information relating to the dispute (s 89N(1)(c)(vi)).

117. Section 89N(1)(c)(vi) states:

     (vi) during the disputes process, the disputant receives from the Commissioner a request under a statute for information relating to the dispute and fails to comply with the request within a period that is specified in the request:

118. Generally, information is provided voluntarily to Inland Revenue. However, in situations where this does not occur, the Commissioner may seek information from the taxpayer under a statute, such as sections 17, 18 and 19. (For the Commissioner's practice regarding section 17, please refer to the appropriate Standard Practice Statement). The statutory request will generally set out the time within which the information must be provided.
     
     
119. Subject to any statutory privilege from disclosure, where the taxpayer fails to comply with any formal request for information that relates to the dispute (e.g. as a delaying tactic to the progress of the disputes resolution process), the Commissioner may issue an assessment without completing the disputes resolution process.

Exception 5: The taxpayer elects to have the dispute heard by the Taxation Review Authority acting in its small claims jurisdiction (section 89N(1)(c)(vii)).

120. Section 89N(1)(c)(vii) states:

     (vii) the disputant elects under section 89E to have the dispute heard by a Taxation Review Authority acting in its small claims jurisdiction:

121. A taxpayer can issue a NOPA to the Commissioner under section 89D (refer to SPS 05/04 - Disputes resolution process commenced by a taxpayer ). At the same time the taxpayer may elect in their NOPA under section 89E(1)(a) that any of the unresolved dispute will be heard by the Taxation Review Authority acting in its small claims jurisdiction. In that case, the full disputes resolution process need not be followed.

Exception 6: The taxpayer and the Commissioner agree in writing that the dispute should be resolved by the court or Taxation Review Authority without the completion of the dispute resolution process (section 89N(1)(c)(viii)).

122. Section 89N(1)(c)(viii) states:

      

     (viii) the disputant and the Commissioner agree in writing that they have reached a position in which the dispute would be resolved more efficiently by being submitted to the court or Taxation Review Authority without completion of the disputes process:

123. Under this exception, where the Commissioner commences the disputes resolution process, the taxpayer and the Commissioner may agree in writing that the dispute should be resolved by the court or Taxation Review Authority prior to the issue of a statement of position by either party. This would occur - for example, if the compliance and administrative costs that the parties might incur in completing the full disputes resolution process would be excessive relative to the amount in dispute.
     
     
124. However, this exception does not mean that the taxpayer may bring a challenge proceeding against the Commissioner at any time. Where this exception applies to a dispute commenced by the Commissioner (i.e. after the taxpayer and the Commissioner have reached an agreement), a challenge proceeding under section 138B still requires an exchange of NOPA and notice of response between the Commissioner and the taxpayer, before the taxpayer can bring a challenge proceeding.

Exception 7: The taxpayer and the Commissioner agree in writing to suspend the disputes process pending the outcome of a test case (s 89N(1)(c)(ix)).

125. Section 89N(1)(c)(ix) states:

     (ix) the disputant and the Commissioner agree in writing to suspend proceedings in the dispute pending a decision in a test case referred to in section 89O.

126. Section 89O allows for the suspension of a dispute pending the result of a test case. If the section applies, the taxpayer and the Commissioner may agree in writing to suspend the dispute from the date of the agreement until the earliest of:
     • the date of the court's decision;
     • the date on which the test case is otherwise resolved; or
     • the date on which the dispute is otherwise resolved.
     
     
     
127. In agreeing to suspend the disputes resolution process, any statutory time bars affecting the dispute are stayed. The Commissioner may then make an assessment that is consistent with the decision of the test case. (Note that the taxpayer is not precluded from challenging the Commissioner's assessment, even if it is consistent with the decision in the test case.)
     
     
128. The Commissioner must issue an amended assessment or perform an action within the specified time limit in section 89O(5).
     
     

129. Section 89O(5) states:

      

     If a suspension is agreed under subsection (2), the period of time during which the Commissioner must make an amended assessment, or perform an action, that is the subject of the suspended dispute is the total of -

     1. the period of time within which the Commissioner, in the absence of the suspension, would be required under the Inland Revenue Acts to make the amended assessment or perform the action:
     2. the period of the suspension that is described in sub-section (3).

Exception 8: The Commissioner applies to the High Court for an order to allow more time for completion of the dispute process, or that the dispute process is not required.

130. Section 89N(3) states:

     ... [T]he Commissioner may apply to the High Court for an order that allows more time for the completion of the disputes process, or for an order that completion of the disputes process is not required.

131. It is envisaged that the exception will be used only in exceptional circumstances. Certain considerations such as complex issues, issues that involve large amounts of revenue and delays caused by the taxpayer may be relevant.
     
     
132. The Commissioner's application to the High Court under section 89N(3) is subject to a statutory time limit. The Commissioner must make the application before the four-year statutory time bar falls due.
     
     
133. The Commissioner is also required to issue an amended assessment within the time limit specified in section 89N(5). The section states:

     If the Commissioner makes an application under subsection (3), the period of time during which the Commissioner must make an amended assessment is the total of -

     1. the period of time within which the Commissioner, in the absence of the application, would be required to make the amended assessment:
     2. the period of time that starts on the date on which the Commissioner files the application in the High Court and ends on the earliest of -
        1. the date of the High Court's decision of the application:
        2. the date on which the application is otherwise resolved:
        3. the date on which the dispute is otherwise resolved:
     3. any further period of time that is allowed by an order of a court as a result of the application.

134. In situations where the Commissioner makes an application under section 89N(3) and the four‑year statutory time bar under section 108 or 108A is imminent, section 89N(5) ensures that the Commissioner is allowed more time to complete the disputes resolution process.
     
     
135. For example, in the disputes resolution process commenced by the Commissioner, the Commissioner applies to the High Court under section 89N(3) for an order that more time will be allowed to complete the disputes resolution process. The application is made on 1 March 2006. The disputed issue is subject to a statutory time bar on 31 March 2006 and the taxpayer does not agree to extend the time bar under section 108B(1). The Commissioner's application is successful as indicated in a High Court decision on 30 June 2006. The High Court orders that the Commissioner will be allowed five further days to complete the process.
     
     
136. The Commissioner must make an amended assessment by 5 July 2006 under section 89N(5). The calculation is as follows:
     • The Commissioner would have one month to make the amended assessment prior to the statutory time bar, i.e. 1 March to 31 March 2006 (section 89N(5)(a))
     plus
     • While there are four months from the date of the Commissioner's application to the date of the High Court decision of that application, i.e. 1 March to 30 June 2006, the period of 1 March to 31 March 2006 has already been counted above. Therefore, only three months, i.e. 1 April to 30 June 2006 will be counted. (section 89N(5)(b))
     plus
     • There are five further days for the Commissioner to complete the disputes resolution process (section 89N(5)(c)).
137. During the period from 1 March to 5 July 2006, the Commissioner and the taxpayer may continue to attempt resolving the dispute. This may include exchanging statements of position and going through the adjudication process.
     
     
138. The above example indicates that the Commissioner has more time to complete the disputes resolution process. The time bar is effectively extended to 5 July 2006.
     
     
139. Where the Commissioner applies to the High Court under section 89N(3) for an order to truncate the disputes resolution process, the Commissioner must issue an assessment within the period as calculated under section 89N(5). Applying the same facts in the above example, if the Commissioner succeeds in the High Court application, the Commissioner must make an assessment by 5 July 2006.

 Application of the exceptions in section 89N

140. The Commissioner's practice is that Inland Revenue officers and taxpayers will endeavour to resolve the dispute prior to or via the adjudication process. Where this is not possible, and one of the eight exceptions in section 89N applies, the Commissioner may amend or adjust an assessment without going through the whole disputes resolution process, i.e. before the Commissioner or the taxpayer accepts a NOPA, notice of response or statement of position issued by the other, or before the Commissioner considers the taxpayer's statement of position.
     
     
141. Then, the taxpayer can challenge the Commissioner's assessment by filing proceedings in the Taxation Review Authority (either acting in its general or small claims jurisdiction) or the High Court within the applicable response period, i.e. within two months starting on the date of issue of the notice of assessment (also refer to paragraph 124 of this Standard Practice Statement.)

 Taxpayer's response to the Commissioner's NOPA: Notice of response

142. If the taxpayer disagrees with the Commissioner's proposed adjustment, then under section 89G, the taxpayer must notify the Commissioner that any or all of the proposed adjustments are rejected by issuing a notice of response ("NOR") within the two-month response period, i.e. within two months starting on the date of issue of the Commissioner's NOPA. The Commissioner interprets this as requiring receipt of the NOR. For instance, if a NOPA is issued on 8 April 2005, the taxpayer must notify the Commissioner of the rejection by issuing a NOR to the Commissioner for receipt on or before 7 June 2005. However, taxpayers are encouraged to issue their NOR to the Commissioner as soon as they have completed it.
     
     
143. The Commissioner will make reasonable efforts to contact the taxpayer or their tax agent two weeks prior to the expiry of the response period to ascertain whether the taxpayer will issue a NOR in response to the Commissioner's NOPA. Contact may be made by way of a phone call or a letter.
     
     
144. The contents of a NOR are prescribed under section 89G(2). The taxpayer must state concisely in the NOR:
     1. the facts or legal arguments in the Commissioner's NOPA that the taxpayer considers are wrong; and
     2. why the taxpayer considers those facts and arguments are wrong; and
     3. any facts and legal arguments relied upon by the taxpayer; and
     4. how the legal arguments apply to the facts; and
     5. the quantitative adjustments to any figure referred to in the Commissioner's NOPA that result from the facts and legal arguments relied upon by the taxpayer.

145. Regarding the requirement of facts and legal arguments relied upon by the taxpayer under section 89G(2)(c) to be specified, the taxpayer may refer to legislative provisions, case law and legal arguments raised in the Commissioner's NOPA. There is no requirement that the taxpayer must refer to different legislative provisions, case law and legal arguments.
     
     
146. The requirement of quantitative adjustment under section 89G(2)(e) establishes, in the taxpayer's opinion, by how much the Commissioner's adjustment in the NOPA is incorrect. There is no requirement that the amount referred to be exact, however every attempt should be made to ensure that it is as accurate as possible. As the dispute progresses, the amount in dispute may be altered. For example a new figure may be worked out at a conference between the parties.

 Deemed acceptance

147. If the taxpayer does not issue a NOR within the two-month response period and there are no exceptional circumstances as defined in section 89K(3), the taxpayer is deemed to have accepted the proposed adjustments in the Commissioner's NOPA. The Commissioner will usually advise the taxpayer of the deemed acceptance two weeks after the expiry of the two-month response period. Section 89H(1) states:

     If a disputant does not, within the response period for a notice of proposed adjustment issued by the Commissioner, reject an adjustment contained in the notice, the disputant is deemed to accept the proposed adjustment and section 89I applies.

 Exceptional circumstances under section 89K

148. Section 89K(3) states:
     1. an exceptional circumstance arises if -
        1. an event or circumstance beyond the control of a disputant provides the disputant with a reasonable justification for not rejecting a proposed adjustment, or for not issuing a notice of proposed adjustment or statement of position, within the response period for the notice:
        2. a disputant is late in issuing a notice of proposed adjustment, notice of response or statement of position but the Commissioner considers that the lateness is minimal, or results from 1 or more statutory holidays falling in the response period:
     2. an act or omission of an agent of a disputant is not an exceptional circumstance unless -
        1. it was caused by an event or circumstance beyond the control of the agent that could not have been anticipated, and its effect could not have been avoided by compliance with accepted standards of business organisation and professional conduct; or
        2. the agent is late in issuing a notice of proposed adjustment, notice of response or statement of position but the Commissioner considers that the lateness is minimal, or results from 1 or more statutory holidays falling in the response period.
     
     
     
149. The legislation defines exceptional circumstances very narrowly. Cases on "exceptional circumstances", such as Treasury Technology Holdings Ltd v CIR (1998) 18 NZTC 13,752, Milburn NZ Ltd v CIR (1998) 18 NZTC 14,005 and Fuji Xerox NZ Ltd v CIR (2001) 20 NZTC 17,470 (CA), are also relevant. For example, a taxpayer's misunderstanding or erroneous calculation of the applicable response period will usually not be regarded as an event or a circumstance beyond the taxpayer's control under paragraph (a) of section 89K(3).
     
     
150. Late NORs will be accepted only on rare occasions. Some examples of situations that may be considered "exceptional circumstances" beyond the control of a taxpayer are explained in Tax Information Bulletin Vol 8, No 3 (August 1996).
     
     
151. The exception for lateness as a result of a statutory holiday is self explanatory. The Commissioner can also accept a late NOR if the Commissioner considers that the lateness is minimal, i.e. the document was only one or two days late. Besides the degree of lateness, the Commissioner will consider the following factors when exercising the discretion under section 89K:
     • the date on which the NOR was issued; and
     • the response period within which the NOR should be issued; and
     • the reasons why the taxpayer failed to issue the NOR within the response period; and
     • the compliance history of the taxpayer in relation to the tax type under consideration (e.g. has the taxpayer paid tax late or filed late tax returns, late NORs in the past?)
152. For example, a taxpayer issued a NOR to the Commissioner two days later than the applicable "response period". The taxpayer failed to provide a legitimate reason for the lateness. It was also found that the taxpayer had a history of filing late NORs within the minimal lateness allowable (i.e. no more than two days outside the applicable "response period") and had been advised on the calculation of the "response period" on more than one occasion. Although the lateness was minimal on each occasion, the taxpayer's NOR would not be accepted in this case. This ensures that the exception under section 89K(3)(b)(ii) is not considered to be an extension of the "response period" in all situations.
     
     
153. Where an application for consideration of exceptional circumstances is made under section 89K, the reasons for accepting or rejecting it will be documented and the actioning officer will notify the taxpayer of the decision in writing within 15 working days of receipt of the taxpayer's application by Inland Revenue.
     
     
154. If the taxpayer's application under section 89K is rejected, the taxpayer will be deemed to have accepted the proposed adjustments in the Commissioner's NOPA. Note that the Commissioner's decision under section 89K is not a "disputable decision".

 Receipt of a taxpayer's NOR

155. When a taxpayer's NOR is received, the NOR will usually be forwarded to the actioning officer within five working days of receipt by Inland Revenue. Following receipt, the actioning officer will ascertain and record the following:
     • the date of issue of the NOR;
     • whether the NOR has been issued within two months starting on the date of issue of the Commissioner's NOPA; and
     • the salient features of the NOR including any deficiencies as to content.
156. Where this is practicable, the taxpayer or their tax agent will be informed in writing within 10 working days that the NOR has been received by Inland Revenue either by phone call or in writing.
     
     
157. However, where the Commissioner is aware of any deficiencies as to the content of the NOR, the taxpayer or their tax agent will usually be notified of these deficiencies as soon as practicable. They will also be notified again of the expiry date of the response period, by which those deficiencies must be rectified in order for the NOR to be valid. (Note: taxpayers are encouraged to issue their NOR as soon as they have completed it. This is because if an invalid or deficient NOR has been issued close to the expiry date of the response period, the taxpayer may not have sufficient time to rectify the invalidity or deficiency before the end of the response period.)
     
     
158. The Commissioner will make reasonable efforts to advise the taxpayer or their tax agent within one month of the receipt of the NOR whether the NOR is being considered, has been accepted, rejected in full or in part.
     
     
159. Where the NOR is accepted in full, the notice of assessment (if applicable) should usually be issued to the taxpayer within one month of the issue of advice of acceptance of the NOR.
     
     
160. If further work is required to be carried out before a decision to accept or reject a NOR can be made, the actioning officer will regularly update the taxpayer or taxpayer's agent on the progress of further analysis or enquiry work being undertaken.

 Deficiencies in the contents of a NOR

161. Where a NOR has been received and where Inland Revenue considers there are deficiencies (i.e. the requirements under section 89G(2) are not met), the actioning officer will take reasonable steps to get the information in the NOR corrected before the expiry of the response period. The taxpayer will be notified of the need for the additional information and the impending deadlines.
     
     
162. If a NOR is not accepted by the Commissioner because there are alleged deficiencies and the information is not corrected before the response period expires, then it could result in deemed acceptance under section 89H(1), unless the NOR is accepted under one of the exceptional circumstances under section 89K. Deemed acceptance finalises the dispute and the taxpayer will no longer have the right to challenge the adjustments before the High Court or Taxation Review Authority.

Conference

 Conduct of a conference

163. Where a dispute remains unresolved following the NOR phase, the conference phase follows. The Commissioner will usually initiate the conference phase within one month after receipt of the taxpayer's NOR. The time suggested for the conference phase is an average of three months. However, the time will vary depending on the facts and the complexity of the specific case.
     
     
164. There is no legislative requirement for a conference. The conference phase is an administrative process which aims to clarify and if possible, resolve the issues in the dispute.
     
     
165. The conduct of the conference should be as flexible as possible, consistent with the taxpayer's wishes and other factors such as the scope of the audit. Conferences may range from a phone call to several meetings. Discussions in conferences must be recorded or otherwise documented and agreed upon if possible. These may include any agreement on facts, common grounds for the dispute to proceed, timeframes for completing the disputes resolution process and agreed adjustments.

 Legal and other advisers attending a conference

166. If a dispute is not settled earlier, the Commissioner and the taxpayer may want to obtain expert legal or other advice. These advisers may attend any meetings in relation to the dispute. The Commissioner accepts that it is appropriate in these circumstances for a certain amount of "back tracking" to take place, i.e. some items already discussed (but which are not agreed in writing or otherwise accepted) between the parties may be revisited by the newly introduced advisers.

 Conference not held or abridged

167. The Commissioner considers the conference phase to be an important part of the disputes resolution process.
     
     
168. In some circumstances the Commissioner will not hold further discussions or a conference, even though agreement has not been reached. This does not mean that the disputes resolution process will come to an end, as the disclosure notice and statement of position phase will still be undertaken. Where the dispute is not resolved in the statement of position phase, the Commissioner and the taxpayer will endeavour to have the dispute resolved via the adjudication process.
     
     
169. Conferences may not be held or may be abridged in one or more of the following situations:
     • There may be revenue losses incurred as a result of delaying tactics used by a taxpayer to frustrate the collection of tax.
     • The Commissioner is satisfied that the taxpayer or the taxpayer's agent is acting in a frivolous or vexatious manner. For example where, the taxpayer or their agent is setting unreasonable demands as to the time and place, or terms of such meeting(s), or refuses to conduct themselves reasonably at any meeting.
     • The taxpayer contests the Commissioner's policy and it is agreed to disagree, or where it is otherwise agreed that a conference would be of no benefit.
     • The taxpayer advises the Commissioner that they do not want a conference to be held.
170. Where it is practicable, the decision whether or not the conference phase will be dispensed with or abridged will be communicated in writing to the taxpayer or their tax agent within seven days of that decision being made. The reasons for the decision not to hold, or abridge, any conference must be documented.

 Disclosure notices

171. The Commissioner must issue a disclosure notice under section 89M(1), unless the Commissioner is not required to complete the disputes resolution process under section 89N (as discussed above) or the Commissioner has issued a notice of disputable decision that includes or takes account of the adjustment proposed in the NOPA under section 89M(2):
     1. Unless subsection (2) applies, and subject to section 89N, the Commissioner must issue a disclosure notice in respect of a notice of proposed adjustment to a disputant at the time or after the Commissioner or the taxpayer, as the case may be, issues the notice of proposed adjustment.
     2. The Commissioner may not issue a disclosure notice in respect of a notice of proposed adjustment if the Commissioner has already issued a notice of disputable decision that includes, or takes account of, the adjustment proposed in the notice of proposed adjustment.
     
     
     
172. A disputable decision is :
     • an assessment; or
     • a decision of the Commissioner under a tax law, except for a decision -
       1. to decline to issue a binding ruling; or
       2. that cannot be the subject of an objection or challenge; or
       3. that is left to the Commissioner's discretion under sections 89K, 89L, 89M(8) and (10) and 89N(3).
     
     
     
173. When issuing a disclosure notice the Commissioner must also provide the disputant with the Commissioner's statement of position (as discussed below) and, include in the disclosure notice a reference to section 138G and the effect of the evidence exclusion rule. Section 89M(3) states:

     ...the Commissioner must, when issuing a disclosure notice, -

     1. Provide the disputant with the Commissioner's statement of position; and
     2. Include in the disclosure notice -
        1. A reference to section 138G; and
        2. A statement as to the effect of the evidence exclusion rule.
     
     
     
174. Where the Commissioner decides to issue a disclosure notice together with a statement of position, the taxpayer will usually be advised of this within two weeks before the date of issuing the disclosure notice and the statement of position.

 Evidence exclusion rule

175. A disclosure notice is the document that triggers the application of the evidence exclusion rule. The rule restricts what the Commissioner and the disputant may raise as evidence in a court challenge to matters raised in their statements of position. (Note that the Commissioner and the taxpayer may refer to evidence that has been raised by either party.) As this is one of the guiding principles of the disputes resolution process, the Commissioner must explain the effect of the evidence exclusion rule and refer to section 138G in the Commissioner's disclosure notice.
     
     
176. In a dispute commenced by the Commissioner, section 89M(6B) states that "evidence" in the context of the evidence exclusion rule refers to the available documentary evidence and does not include a list of witnesses or types of witnesses. Therefore the identities of both the taxpayer's and Commissioner's witnesses in sensitive cases will continue to be protected, without undermining the effect of the evidence exclusion rule.

 Issue of a disclosure notice

177. It is possible for the Commissioner to issue a disclosure notice at any time on or after the issue of a NOPA by either the taxpayer or the Commissioner.
     
     
178. Generally such a notice will be issued after receipt of a NOR following the conference phase and in accordance with the agreed time line between the Commissioner and the taxpayer. Where a disclosure notice is issued earlier (e.g. the facts are clear, the taxpayer agrees, or a conference is not required) the reasons must be documented.
     
     
179. When making the decision to issue a disclosure notice prior to completion of the conference phase it must be kept in mind that if the taxpayer comes up with new or novel matters in their statement of position the Commissioner only has two months to reply barring a High Court application (refer to section 89M(8)).

 Statement of position

180. Pursuant to section 89M(3), where the Commissioner commences the disputes resolution process, the Commissioner must issue the taxpayer with a statement of position ("SOP") along with the disclosure notice.
     
     
181. Where the disputed issue relates to a tax type that is subject to the statutory time bar (e.g. income tax, GST, etc) that falls within the current income year, the Commissioner and the taxpayer will endeavour to complete the disputes resolution process. Where the Commissioner and the taxpayer have issued a SOP to each other and there is insufficient time to complete the adjudication process, the Commissioner and the taxpayer may agree to a statutory time bar waiver. However, if no such agreement is reached, the Commissioner may amend and issue the assessment prior to the statutory time bar, provided that the taxpayer's SOP has been fully considered.

 Contents of a statement of position

182. The contents of a SOP are binding. Under the principle of the "evidence exclusion rule" if the matter proceeds to court, the parties are limited to the facts, evidence (excluding oral evidence), issues and propositions of law which are relied on (by either party). The SOP must be in the prescribed form and must contain sufficient detail to fairly inform the taxpayer of the facts, evidence, issues and propositions of law that the Commissioner wishes to rely on.
     
     
183. Section 89M(4) states:

     The Commissioner's statement of position in the prescribed form must, with sufficient detail to fairly inform the disputant, -

     1. Give an outline of the facts on which the Commissioner intends to rely; and
     2. Give an outline of the evidence on which the Commissioner intends to rely; and
     3. Give an outline of the issues that the Commissioner considers will arise; and
     4. Specify the propositions of law on which the Commissioner intends to rely.

184. The minimum contents requirements of a SOP are an outline of the relevant facts, evidence, issues and propositions of law. However, to enable the Adjudication Unit to successfully reach a decision, it is important that the SOP contains full, complete and detailed submissions. An outline of frank and complete discussion of the issues, the law, arguments and evidence supporting the arguments is implicit in the spirit and intent of the disputes resolution process.
     
     
185. In the NOPA phase, it is an intention of the process that the submissions are concise to enable the parties to progress the dispute without incurring huge expense. However, at the SOP phase where the issues have not been resolved and are likely to be presented to a court for resolution, it is envisaged that full, complete and detailed submissions will be made. Under the principles of the evidence exclusion rule, arguments and evidence that are not present in the SOP will be excluded from consideration by a court.
     
     
186. The list of evidence that is required to be submitted with the SOP does not include a list of potential witnesses. Section 89M(6B) states:

     In subsection 4(b) and 6(b), evidence refers to the available documentary evidence on which the person intends to rely, but does not include a list of potential witnesses, whether or not identified by name.

187. Therefore, only documentary evidence needs to be listed in the SOP. Witnesses' identities will continue to be protected without undermining the effect of the evidence exclusion rule.
     
     
188. It must be remembered that if the SOP discusses shortfall penalties any other appropriate penalties of a lesser percentage and reductions for shortfall penalties (e.g. voluntary disclosure, temporary shortfall, reduction for previous behaviour) must also be stated as alternative arguments. This is to ensure that the appropriate penalty is assessed in all cases. However, note that if shortfall penalties are not proposed in a NOPA, the Commissioner cannot propose them at the SOP phase without first issuing a separate NOPA in respect of the shortfall penalties

 Receipt of taxpayer's statement of position

189. Where the Commissioner has issued a disclosure notice and SOP, the taxpayer must issue a SOP within the two-month response period starting on the date of issue of the disclosure notice. However, pursuant to section 89M(11), prior to the expiry of the response period, the taxpayer may apply to the High Court for more time to reply to the Commissioner's SOP. The court may accept the application if the taxpayer can demonstrate that the issues in dispute had not previously been discussed between the Commissioner and the taxpayer and thus, it is unreasonable to reply to the Commissioner's SOP within the response period.
     
     
190. The Commissioner will make reasonable efforts to contact the taxpayer or their tax agent two weeks prior to the expiry of the response period to ascertain whether the taxpayer will issue a SOP in response to the Commissioner's disclosure notice. Contact can be made by phone or in writing. Where the taxpayer has issued a SOP, it will be forwarded to the actioning officer within five working days of receipt by Inland Revenue. Following receipt, the actioning officer will ascertain and record the following:
     • the date of issue of the SOP;
     • whether the SOP has been issued within two months starting on the date of issue of the disclosure notice; and
     • the salient features of the SOP including any deficiencies as to content.
191. Where it is practicable, a taxpayer's SOP will be acknowledged as received within 10 working days of receipt by Inland Revenue. However, where the Commissioner is aware of any deficiencies as to the content of the SOP, the taxpayer or their tax agent will usually be notified of these deficiencies as soon as practicable. They will also be notified again of the expiry date of the response period, by which those deficiencies must be rectified in order for the SOP to be valid and whether the Commissioner proposes to provide the taxpayer with any additional information.
     
     
192. Where a SOP has been issued outside the applicable response period, the taxpayer may apply for consideration of exceptional circumstances under section 89K. The reasons for accepting or rejecting the application will be documented and the actioning officer will make reasonable efforts to notify the taxpayer of the decision in writing within 15 working days of receipt of the taxpayer's application by Inland Revenue.
     
     
193. A taxpayer is deemed to have accepted the Commissioner's SOP if they fail to issue a SOP within two months starting on the date of the issue of the disclosure notice and none of the exceptional circumstances under section 89K apply. Where practicable, the Commissioner will make reasonable efforts to notify the taxpayer of the deemed acceptance within two weeks after expiry of the response period for the disclosure notice.

 The Commissioner's reply

194. Pursuant to section 89M(8), the Commissioner may, within two months of the issue of the taxpayer's SOP, provide the taxpayer with additional information in response to matters raised by the taxpayer in their SOP.
     
     
195. This is intended to cover the situation where a taxpayer raises new or novel information or arguments at this stage and should be confined to these issues. Any additional information must be provided as far as possible in the same format as the SOP of which it becomes a part. If the Commissioner intends to provide the taxpayer with additional information under section 89M(8), the taxpayer or their tax agent will usually be notified of this within two weeks from the receipt of the taxpayer's SOP. However, the time of notification may vary depending on the facts and complexity of the dispute.
     
     
196. It must be noted that the taxpayer does not have a right of reply to the additional information provided by the Commissioner, unless there is an agreement between the Commissioner and the taxpayer that additional information will be accepted. (Refer to "Agreement to include additional information" below.)

 Agreement to include additional information

197. There is scope to agree to add any additional information to the SOPs. Despite the absence of any statutory time limit, the Commissioner's practice is to allow one month (from the date of the Commissioner's provision of additional information under section 89M(8)) for such agreement to be reached and information provided. However, this will be applied after taking into account the taxpayer's prior conduct, in particular, whether the taxpayer could have provided the information earlier through the application of due diligence.
     
     
198. The Commissioner will also consider the materiality and relevance of the additional information, and its capacity to help resolve the dispute.
     
     
199. The primary concern of the disputes resolution process is that both parties apply proper cooperation and due diligence in resolving the matters at issue. Additional information will therefore not be accepted unless proper cooperation and due diligence have been demonstrated.
     
     
200. Where a taxpayer requests to have additional information added and the request is declined, the reasons will usually be communicated to the taxpayer or their tax agent. The reasons will also be documented with detailed reference to the taxpayer's conduct, level of cooperation prior to the request and the reason for the information not being provided earlier.
     
     
201. Where the additional information is agreed to be added to the SOPs, the agreement will be made subject to the taxpayer agreeing that the Commissioner may include a response to the additional information to the SOP, if required.

 Preparation for adjudication

202. Within the disputes resolution process, the role of the Adjudication Unit in Inland Revenue's National Office is to take a fresh look at tax disputes in an impartial and independent manner, and to provide technically accurate decisions. The Commissioner's practice is to refer all disputes to the Adjudication Unit, where practicable.
     
     
203. Where the dispute commenced by the Commissioner is not resolved after both the Commissioner and the taxpayer have issued a SOP, the taxpayer may request that an assessment be issued and that they can challenge the Commissioner's assessment by commencing proceedings in a court or Taxation Review Authority under section 138B. In this situation, the dispute will be heard by a court or Taxation Review Authority, rather than going through the adjudication process first.
     
     
204. However, where the dispute is referred to the Adjudication Unit in Inland Revenue's National Office, the Commissioner should not issue an assessment prior to the adjudication process. In this situation, the actioning officer will prepare a cover sheet that will note all documents that need to be sent to the Adjudication Unit.
     
     
205. The cover sheet together with copies of the documents (NOPA, NOR, notes of conferences, the taxpayer's SOP, the Commissioner's SOP, additional information, material evidence, including expert opinions or specialist advice obtained, together with a schedule of all evidence held) will be sent to the Adjudication Unit.
     
     
206. A letter together with a copy of the cover sheet will be issued by the actioning officer to the taxpayer prior to the submissions and evidence being sent to the Adjudication Unit. The cover sheet and the letter are usually completed within one month from the date of issue of the Commissioner's reply to the taxpayer's SOP (if any) or within one month from the expiry date of the response period for the taxpayer's SOP.
     
     
207. The purpose of this letter is to seek concurrence on the material to be sent to the adjudicator-primarily in regard to documentary evidence that has been disclosed at the SOP phase. This letter will allow no more than 10 working days for response.
     
     
208. All materials to be forwarded to the Adjudication Unit will usually be forwarded within 12 working days of the issue of the letter to the taxpayer, advising the taxpayer that the materials are being forwarded to the Adjudication Unit.
     
     
209. Where an investigation has covered a number of issues, the cover sheet will outline which issues have been agreed upon between the Commissioner and the taxpayer and which issues are still in dispute. The adjudicator is then able to direct their attention to those issues in dispute. The adjudicator will not reconsider those issues that have been agreed upon.
     
     
210. The adjudicator usually only considers the materials submitted by the Commissioner and the taxpayer. They do not usually seek out further information, although they may consider additional material which is relevant. However, if the additional material was not contained in the Commissioner or the taxpayer's SOP, and the matter proceeds to litigation, that material cannot be put forward as evidence in court (refer to discussion on the evidence exclusion rule above). The only exception is where the parties to the dispute agree to include it as additional information under section 89M.

 Adjudication decision

211. Once the Adjudication Unit has reached a conclusion the taxpayer and the actioning officer will be notified of the decision. The actioning officer will carry out any of the recommendations of the Adjudication Unit and follow up procedures where required. Where applicable, this includes issuing a notice of assessment to the taxpayer.
     
     
212. Where a decision is made by the Adjudication Unit against the Commissioner, the Commissioner must follow the Adjudication Unit's decision. The Commissioner is bound by the decision and cannot challenge that decision. The dispute will be at an end.
     
     
213. Where a decision is made by the Adjudication Unit against the taxpayer, the taxpayer may challenge the assessment (whether made by the Commissioner or the taxpayer) or the disputable decision.
     
     
214. In a disputes resolution process commenced by the Commissioner, the taxpayer if disagreeing with the Adjudicator's decision, may file proceedings in the Taxation Review Authority (either acting in its general or small claims jurisdiction) or the High Court if one of the following conditions under section 138B(1) is met:
     • The assessment includes an adjustment proposed by the Commissioner which the taxpayer has rejected within the response period.
     • Where the assessment is an amended assessment the assessment imposes a fresh liability or increases an existing liability.
215. The taxpayer must file proceedings with the Taxation Review Authority or High Court within the response period, i.e. two months starting on the date of issue of the assessment.

This Standard Practice Statement is signed on 23 March 2005.

 

Graham Tubb
National Manager
Technical Standards

 Appendix 1

Disputes resolution process commenced by the Commissioner of Inland Revenue: indicative administrative timeframes

Disclaimer: Except for those subject to statutes, the timeframes in this Appendix are intended administrative guides for Inland Revenue. Failure to meet these administrative timeframes will not invalidate subsequent actions of the Commissioner, or prevent the cases going through the disputes resolution process.

Para in the SPS	Key actions	Timeframes
The Commissioner's notice of proposed adjustment ("NOPA")
64	Advise the taxpayer that a NOPA will be issued.	Usually within 7 days before the date of issuing the Commissioner's NOPA, but this may happen earlier.
66	Confirm that the taxpayer has received the Commissioner's NOPA (either by phone call or in writing).	Within 10 working days from the date of issuing the Commissioner's NOPA, where practicable.
Taxpayer's notice of response ("NOR")
141	The taxpayer issues a NOR within the applicable response period.	Within 2 months from the date of issuing the Commissioner's NOPA, unless one of the "exceptional circumstances" under section 89K applies.
142	Confirm whether the taxpayer will issue a NOR.	Usually 2 weeks before expiry of response period to the Commissioner's NOPA
155	Forward the taxpayer's NOR to the actioning officer.	Usually within 5 working days of receipt of the taxpayer's NOR
156	Acknowledge the receipt of the taxpayer's NOR.	Usually within 10 working days of receipt of the taxpayer's NOR
157	Advise that the taxpayer's NOR is invalid, but the 2-month response period has not expired.	Inland Revenue officers will advise the taxpayer or their agent as soon as they become aware of the invalidity.
153	Consider the application of "exceptional circumstances" under section 89K, where a taxpayer's NOR has been issued outside the applicable response period.	Usually within 15 working days of receipt of taxpayer's application.
147	The taxpayer is deemed to accept the Commissioner's NOPA, as the taxpayer fails to issue a NOR within the applicable response period and none of the "exceptional circumstances" apply in the case of late NOR.	Usually 2 weeks after expiry of the response period to the Commissioner's NOPA.
158	Advise the taxpayer whether the NOR is being considered, has been accepted, rejected in full or part.	Usually within 1 month of receipt of the taxpayer's NOR.
159	If the taxpayer's NOR has been accepted in full, the dispute comes to an end and Inland Revenue will take appropriate actions (e.g. issue an assessment).	Usually within 1 month of the issue of advice of acceptance of the NOR.
Conference phase (if applicable)
163	Contact the taxpayer to initiate the conference phase.	A conference usually commences within 1 month from the receipt of the taxpayer's NOR. The suggested average timeframe of the conference phase is 3 months, subject to the facts and complexity of the dispute.
170	Communicate the decision not to hold, or abridge any conference must be documented in writing and conveyed by the Commissioner to the taxpayer or agent.	Usually within 7 days from the Commissioner's decision.
Disclosure notice and the Commissioner's statement of position ("SOP")
174	Advise the taxpayer that a disclosure notice and the Commissioner's SOP will be issued.	Usually within 2 weeks before the date of issuing the Commissioner's disclosure notice and SOP.
Taxpayer's SOP
189	The taxpayer must issue a SOP within the response period for the disclosure notice.	Within 2 months from the date of issuing the disclosure notice, unless one of the "exceptional circumstances" under section 89K applies.
190	Confirm whether the taxpayer will issue a SOP.	Usually 2 weeks before expiry of response period to the Commissioner's disclosure notice.
190	Forward the taxpayer's SOP to the actioning officer.	Usually within 5 working days of receipt of the taxpayer's SOP.
191	Acknowledge the receipt of the taxpayer's SOP.	Usually within 10 working days of receipt of the taxpayer's SOP.
191	Advise that the taxpayer's SOP is invalid, but the 2-month response period has not expired.	Inland Revenue officers will advise the taxpayer or their agent as soon as they become aware of the invalidity.
192	Consider the application of "exceptional circumstances" under section 89K, where the taxpayer's SOP has been issued outside the applicable response period.	Usually within 15 working days of receipt of taxpayer's application.
193	The taxpayer is deemed to accept the Commissioner's SOP, as the taxpayer fails to issue a SOP within the applicable response period and none of the "exceptional circumstances" apply.	Usually 2 weeks after expiry of the response period for the disclosure notice.
Addendum to the Commissioner's SOP
195	Advise the taxpayer whether the Commissioner will provide additional information via addendum to the Commissioner's SOP.	Usually within 2 weeks of receipt of the taxpayer's SOP, subject to the facts and complexity of the dispute.
194	Provide additional information via addendum to the Commissioner's SOP within the response period for the taxpayer's SOP.	Within 2 months from the issue of taxpayer's SOP.
197	Consider a taxpayer's request to add additional information to the taxpayer's SOP.	Usually within 1 month from the date of issue of the Commissioner's addendum.
Adjudication
206	Prepare a cover sheet and issue a letter (including a copy of the cover sheet) to the taxpayer to seek concurrence of the materials to be sent to the adjudicator.	Usually within 1 month from the date of issue of the Commissioner's addendum (if any) or within 1 month from the expiry date of the response period for the taxpayer's SOP.
207	The taxpayer responds to the Commissioner's letter.	Within 10 working days from the date of issue of the Commissioner's letter.
208	Forward materials relevant to the dispute to the Adjudication Unit.	Usually within 12 working days from the date of issue of the Commissioner's letter.
	Adjudication of the disputes case.	Usually 4 months from the date of receipt of the dispute file by the Adjudication Unit, subject to the facts and complexity of the dispute.