Resources > NZ Tax and Trusts Case Notes > Case Notes 2018 > How did it get so late so soon? TRA Cases 2/2018 and 4/2018
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How did it get so late so soon? TRA Cases 2/2018 and 4/2018An adjustment to a taxpayer’s tax liability can be proposed by the taxpayer, or by the Commissioner. Regardless of who says ‘go,’ however, once the disputes process is initiated, there are tight time frames and statutory deadlines to be met. Further, failing to meet these deadlines can result in an adjustment being automatically deemed accepted or a challenge being struck out entirely. All too quickly, a taxpayer can find themselves repeating a sentiment well expressed by Dr Seuss, ‘How did it get so late so soon?’ The following three cases are summarised to illustrate the traps and pitfalls inherent in approaching the disputes process without proper guidance and understanding. Case 12/2016 Too often taxpayers are caught out by non-compliance, not only with tax obligations, but also with the detailed statutory disputes process. In Case 12/2016, the Commissioner sought to strike out the proceedings brought by the taxpayer. If a case is struck out the judge removes the challenge from the court entirely. These proceedings challenged the Commissioner’s decision to refuse to accept the taxpayer’s Notice of Proposed Adjustment (“NOPA”) which sought a GST refund. A NOPA is filed to change a return or disagree with an assessment or disputable decision. There are different time limits for filing a NOPA depending on what the taxpayer is responding to or amending. In this case, the taxpayer did not file a NOPA until four years after the initial decision not to pay the GST refund to the taxpayer. The taxpayer failed to show a reasonable intention to continue the disputes process, or exceptional circumstances preventing them from filing the NOPA in time. As a result, the claim was struck out, and the GST refund sought was not available to the taxpayer. Case 2/2018 This case also stemmed from a GST claim. The Commissioner reassessed a 2008 GST return period in 2011, changing the refund due from $144,706.72 to $0. The Commissioner asserted that the taxpayer was involved in fraudulent activity. The taxpayer wished to dispute the Commissioner’s finding, and duly filed a NOPA in response to the assessment, alongside a notice of claim in the Taxation Review Authority (“TRA”). The Commissioner replied with a notice of response (“NOR”), which was rejected in writing by the taxpayer. At this stage, the Commissioner asked if the taxpayer wished to continue with the challenge proceedings in the TRA. Despite responding that he did intend to pursue this challenge, he requested that the disputes process be suspended until further notice. Two years later, in 2013, having presumably collected his thoughts, the taxpayer filed to discontinue the TRA proceedings that were still on hold, and wrote to the Commissioner requesting that the dispute process be progressed. However, by discontinuing the TRA proceedings, the taxpayer had inadvertently accepted the Commissioner’s assessment by default. In 2015, the taxpayer again wrote to the Commissioner requesting that the GST refund at issue be paid. A response in 2016 stated that no such refund would be paid. Finally, in the recent 2018 hearing, the TRA heard the taxpayer’s claim which tried to continue disputing the allegations of fraud and demand the GST refund be paid. Unfortunately, the TRA found that the discontinuance in 2013 resulted in a time bar, and the taxpayer had no further recourse to challenge the Commissioner’s assessment. As a result, the Commissioner’s reassessment stood. “They are one of the most unpleasant races in the galaxy - not actually evil, but bad tempered, bureaucratic, officious and callous. They wouldn't even lift a finger to save their own grandmothers from the Ravenous Bugblatter Beast of Traal without an order, signed in triplicate, sent in, sent back, queried, lost, found, subjected to public enquiry, lost again, and finally buried in soft peat for three months and recycled as firelighters.” It is far too easy to file out of time, or file incorrectly, and suddenly find a legitimate claim simply cannot be heard. If you wish to challenge an assessment, amend a return or dispute a decision and are concerned about your duty to file on time, in the correct manner and with the required information, you can contact me using our contact page or call my Chambers on (09) 307 3993. © G D Clews, 2018
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