A Taxpayer Dispute with Inland Revenue

by The Findlaw Team


If a taxpayer disagrees with an assessment or an adjustment that either they have made or Inland Revenue has made then the taxpayer can appeal it through the process known as the “disputes resolution process”.

The disputes resolution process came into effect in 1996 and is set out in Part IVA of the Tax Administration Act 1994 (“TAA”). The process encourages taxpayers and Inland Revenue to come to a speedy resolution. Issues must be identified and facts and evidence disclosed at an early stage. There are opportunities to resolve matters at various stages in the process. There is also an opportunity to have the matter independently and impartially reviewed before Court proceedings are initiated.

The Disputes Resolution Process

Except in very limited circumstances, Inland Revenue cannot amend a taxpayer’s assessment prior to the completion of the disputes resolution process. Prescribed documents must be completed and served by both the taxpayer and Inland Revenue.

A dispute is started by the issuing of a Notice of Proposed Adjustment (“NOPA”).


The NOPA must be in the prescribed form (IR770) and include the following information:

  • Details of the items proposed should be changed;
  • The tax laws that support the proposed adjustment;
  • An outline of the facts which give rise to the changes;
  • The legal issues; and
  • The propositions of the law relied on – (statements about how the law applies).


There are extremely strict timeframes around the issuing of a NOPA. Except in very limited circumstances (known as “exceptional circumstances”) if a taxpayer misses the deadline then they will lose their opportunity to dispute an assessment or adjustment and will be deemed to have accepted Inland Revenue’s position. 

A NOPA must be issued within four months of the date a GST return is received by Inland Revenue. That date will appear on Inland Revenue’s acknowledgment form which is sent to taxpayers once the return is processed.

A NOPA must also be issued within four months of date of an Inland Revenue assessment.

Next step

If Inland Revenue accepts the taxpayer’s adjustments then it will issue a new assessment and the matter will be completed.

If Inland Revenue does not accept the taxpayer’s NOPA then Inland Revenue must serve the taxpayer with a Notice of Response (“NOR”).

The NOR sets out the reasons why Inland Revenue rejects the taxpayer’s proposed adjustments. It will also set out how the adjustment could be amended so that agreement could be reached.


As with a NOPA there is a very strict timeframe around issuing of a NOR. Inland Revenue must within two months of the date of the issuing of the NOPA serve its NOR.

Next step

The taxpayer can either accept or reject the NOR. If accepted the original adjustment/assessment will stand.

If the taxpayer rejects the NOR then they must let Inland Revenue know in writing within two months of the date the NOR was issued.


Following the rejection of the NOR a conference is usually held between the taxpayer and officers of Inland Revenue. This is to discuss the issues in more depth and to attempt to resolve them. Attending a conference is not a legislative requirement.

The taxpayer will be offered the opportunity to have a facilitated conference. This enables a senior member of Inland Revenue who has had no involvement with the dispute to manage the conference. The facilitator will not make a decision about the issues but rather assist the parties to reach resolution where possible.

Statement of Position

If agreement is still not reached then Inland Revenue will send a disclosure notice which requires the taxpayer to provide a Statement of Position (“SOP”) within two months. Failure to meet this timeframe will mean that the taxpayer is deemed to accept Inland Revenue’s NOR.

The SOP must contain:
  • The facts;
  • The evidence;
  • The propositions of law being relied on; and
  • The issues that arise from the facts and the evidence.

In the event the dispute goes to Court and Inland Revenue has issued the disclosure notice, then under the evidence exclusion rule, the parties will be limited to raising only the issues and the propositions of law disclosed in the SOPS. No new issues or propositions can be raised. The parties will be able to raise new facts and evidence.

On receipt of the taxpayer’s SOP Inland Revenue has two months to issue its own SOP.

Disputes Review Unit

If agreement has not been reached then generally the dispute will be referred to the Disputes Review Unit for consideration. This means the dispute will be reviewed by a specialist team who have had no prior involvement in the matter. This review is not a legislative requirement.

If the Disputes Review Unit finds in favour of the taxpayer, Inland Revenue has no right of appeal against that decision. If, however, the decision is found in favour of Inland Revenue the taxpayer can continue the dispute by raising a challenge in the Taxation Review Authority or the High Court.

Need Help?

If you or someone you know needs legal advice regarding a dispute with Inland Revenue you can find a lawyer in your area who specialises in this area of law using the FindLaw directory.

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