Interacting with the Inland Revenue can be an interesting experience at times, and it is advisable to maintain a respectful demeanour when representing clients and their tax affairs. Contact with IR is often initiated by a risk review letter, and a considered response at that stage is recommended as it can deal with the matter without leading to the formal disputes regime. Our approach is to assist IR to understand our client’s position, and to seek to resolve any dispute correctly under the law. Below are some of the successful outcomes in 2018/2019.
1. Voluntary Disclosure accepted by IR and limited to four income years for non-reported FIF income of 20 years, combined with a section 113 request to amend previous FIF CV/FDR alternatives. Use of tax pooling to reduce UOMI.
2. Solicitor sought a second opinion whether IRD’s demand of GST of $900k on a property purchase was payable. Complex factual and technical GST issues were at issue, and following a conference with IRD and submissions, we settled the liability at $325k.
3. IR undertook a Risk review regarding the deductibility of interest. We attended a conference with IR with accountant in justifying deduction based on agency agreements backed up by TRA case authority.
4. Under audit IR sought to tax a property sale where rental income was intended but ultimately not received: IR accepted proof of intention and the case cited in support and treatment as non-taxable. Tax at issue of $400k.
5. IR Risk Review – IR Service Delivery Group referred a liquidation to Head Office for review, who asserted the liquidation methodology had been undertaken incorrectly and the significant capital gain distributed was taxable as a dividend. Convinced IR this was incorrect. Tax at stake of $1.8m.
6. At Adjudication where the Disputes Unit agreed the Commissioner’s assessments should be reversed. IR had assessed the taxpayer director with remission income on liquidation, and it was determined the company’s loan (asset) had not been remitted and became bona vacantia on liquidation. Tax deferred of $900k.
If you have any client situations that cross over any of these issues, feel free to get in touch for assistance.