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This page outlines how the Office of the Chief Tax Counsel (OCTC) deals with communications it receives that are associated with a dispute that has been referred to the Disputes Review Unit (DRU) for adjudication.
Under the disputes process, a tax dispute between the Service Delivery Group (SDG) of Inland Revenue and a taxpayer is generally referred to DRU to review. DRU is independent of Inland Revenue’s audit function, so as to facilitate impartiality, and is intended to take a fresh look at the application of the law to the facts of the disputed case. As such, the actual and perceived independence of DRU is a matter that is taken very seriously.
As noted in Tax Information Bulletin, Volume 8, Number 3, August 1996 ("TIB"), it is intended that communications with DRU about a dispute being considered by a DRU team would be very rare and, in most instances, would be initiated by DRU itself. This would generally be in circumstances where the DRU team required clarification of some matter concerning the dispute. In all such cases, contact will be in writing and a copy of the letter is also sent to the other party to the dispute. This is to ensure openness and transparency of the adjudication process, and also to prevent compromising some aspects of the disputes process, including the role of the Statement of Position and the operation of the issues and propositions of law exclusion rule.
The TIB implies that the disputants cannot initiate any communications with DRU. However, in practice, taxpayers/agents and Inland Revenue staff, from time to time, do attempt to contact DRU for various reasons. These communications are managed by OCTC’s Senior Technical & Liaison Advisor (STLA) in a manner that endeavours to ensure that the impartiality and independence of the adjudication process is not compromised.
There are two principles that guide DRU and the STLA in managing inward communications that are associated with a dispute that has been referred to DRU.
These two principles generally overlap so as to effectively require that the parties are aware both of the reasons for the decision and what has influenced the DRU team in the course of their deliberations. An example of this can be seen in the final Adjudication Report issued by DRU, which is comprehensive as to the reasons for the decision(s). If an aspect is not in the report, then it did not influence the DRU team and does not form part of the reasoning or decision of the DRU team in that matter.
There are two categories of communications:
The first category is straightforward and is of the type referred to in the TIB. The types of communications that fit into this category include letters enquiring whether a single report can be prepared in cases which concern more than one taxpayer, and (in rare situations) letters requesting clarification of something in a Statement of Position or requesting evidential material referred to in a Statement of Position but not included in the material provided. The STLA signs these letters and ensures that copies are referred to both parties.
As already noted, the second category involves communications received from a taxpayer or their agent, or from the Service Delivery area of IRD. The nature of these communications can range from enquiries about the state of progress of their particular case to wishing to refer additional material for consideration.
The second category involves communications received from a taxpayer or their agent, or from the SDG. All inward communications are received by the STLA in the first instance and would be answered by the STLA if the matter is of a general or procedural nature. Some entirely administrative or system-related communications are dealt with solely by the STLA. These are not seen by the DRU team working on the case and would not generally be copied to both parties. However, all communications which are passed on to the DRU team working on the particular case will be copied to both parties to the dispute.