Reading time: 6 minutes

If Inland Revenue disagrees with a tax return that your business has filed, it may start an Inland Revenue dispute process. This process is called the Commissioner-initiated disputes process, which differs slightly from the taxpayer-initiated process. This article will detail: 

  • how the Commissioner-initiated disputes process works; and 
  • what your business should do when it is involved in an Inland Revenue dispute.  

1 – Notice of Proposed Adjustment

If Inland Revenue wishes to adjust a tax return that your business has filed, you will receive a notice of proposed adjustment or NOPA. The NOPA will outline:

  • how much Inland Revenue wishes to adjust your tax return;
  • the facts and points of law that support the adjudgment that they are proposing; and
  • how this law applies to the facts. 

The disputes process will only continue if you disagree with the NOPA. If you accept the adjustment that Inland Revenue proposes, Inland Revenue will issue a new tax assessment, and the dispute process will end. 

2 – Notice of Response

If you do disagree with the NOPA, you will have to reply with a notice of response, or NOR. You must reply within two months from the date that Inland Revenue issued the NOPA. The NOR must include:

  • the changes you wish to make to the NOPA;
  • the facts that support these proposed changes; and
  • why you think your changes are correct. 

If Inland Revenue accepts your changes, they will issue a new tax assessment, and the dispute process will end. However, if Inland Revenue disagrees with your NOR, the process will continue. 

3 – Conference About the Dispute

At this point in the dispute process, you and a representative from Inland Revenue will convene in person or speak over the phone. In this conference, you will:

  • discuss information and any relevant documents concerning the dispute; and
  • try to come to a resolution.

If you come to a resolution, Inland Revenue will issue a new tax assessment to reflect this arrangement. If the conference is not successful, you have the option to:

  • continue with the dispute process; or
  • issue an opt-out request and resolve the dispute by the Taxation Review Authority or the High Court. 

4 – Disclosure Notice and Statement of Position

If you continue with the dispute process, Inland Revenue will send your business a disclosure notice and a statement of position, or SOP. This SOP will detail the:

  • issues that Inland Revenue considers are in dispute; and
  • facts, evidence and law that Inland Revenue is relying on. Unless you consent to introducing new issues or points of law, these are the only points that Inland Revenue can bring up in the disputes process. 

In the two months following Inland Revenue issuing the disclosure notice, you must reply with a statement of position. Your SOP must include:

  • the facts that support your business’s view;
  • the questions you believe need to be answered to resolve the dispute; and
  • why you think your business’s view is correct. Similar to Inland Revenue’s SOP, you cannot introduce any new issues or points of law without Inland Revenue’s consent. 

5 – The Disputes Review Unit 

At this stage in the dispute process, your case will be referred to the Disputes Review Unit. The Disputes Review Unit is a group of independent experts within Inland Revenue who will take a fresh look at your dispute. You will be assigned a team of three professionals who will review your SOPs and consider the:

  • facts; 
  • evidence; 
  • points of law; and 
  • issues raised. 

The Unit will come to a final decision and send both you and Inland Revenue an adjudication report. This report will detail its decision and how the Unit reached that outcome.

If they decide the case in your favour, Inland Revenue will issue a tax assessment in line with your NOR and the dispute will end. If they decide the case in Inland Revenue’s favour, they will issue a new tax assessment in line with their NOPA. You can: 

  • accept these changes and end the dispute; or 
  • refuse and continue the dispute process.

6 – Taxation Review Authority or the High Court

If you refuse to accept Inland Revenue’s NOPA, you have two months from the date that you received the adjudication report to bring your dispute to the Taxation Review Authority or the High Court. The Taxation Review Authority is an alternative to court that is:

  • less formal;
  • usually less expensive; and
  • is not open to the public. 

In the Taxation Review Authority or the High Court, you will have to demonstrate:

  • that Inland Revenue’s assessment was wrong;
  • why their assessment was wrong; and
  • the amount by which their assessment was wrong. 

Key Takeaways

Your business may have to engage in a dispute process if Inland Revenue disagrees with your tax return. This process can quickly end if you accept the changes that Inland Revenue proposes. However, if you disagree with their NOPA, you can continue with the dispute process by:

  • replying with a notice of response; 
  • organising a conference with an Inland Revenue representative; 
  • reply to Inland Revenue’s Disclosure notice with a Statement of position; 
  • referring your case to the Disputes Review Unit; and
  • bringing your dispute to the Taxation Review Authority or the High Court. 

If you need assistance with a dispute with Inland Revenue, contact LegalVision’s disputes lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions 

Why would my business have to be involved in a dispute with Inland Revenue?

If Inland Revenue disagrees with a tax return that your business has filed, they will send you a notice of proposed adjustment, thus beginning the disputes process.

What is involved in the Inland Revenue disputes process?

After Inland Revenue has sent you a notice of proposed adjustment, the dispute process begins as follows: your business will reply with a notice of response, both you and a representative from Inland Revenue will have a conference to discuss the dispute, you will be sent a disclosure notice and a statement of position and have to reply with a statement of position, your case will be referred to the Disputes Review Unit, and you can bring your case to the Taxation Review Authority or the High Court. 

What is the Disputes Review Unit?

The Disputes Review Unit is an impartial body that reviews cases going through the Inland Revenue dispute process.

What is the Taxation Review Authority? 

The Taxation Review Authority is a forum that can hear and provide a binding decision on your dispute with Inland Revenue. It is a cheaper and more private alternative to going to the High Court. 

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer