Tax Challenges and Appeals

The TRA hears tax challenges in private. When its judgments are published they do not contain any information which would identify the taxpayer. The TRA has no power to award costs against an unsuccessful party. It operates as a commission of inquiry and so in some cases can receive evidence that would be excluded in an ordinary Court. The current TRA is a highly experienced District Court Judge who has seen most tax situations over many years.
 

The High Court is the forum usually chosen for major, complex or significant litigation. It is equipped to deal with complex documentary evidence. Its Judges have a wide range of experience in the law, not always in tax. If you are confident of winning, the Court awards costs in favour of the successful party. Often the IRD prefers the High Court to the TRA because of these factors and because there is one less tier of appeal from it.
 

Costly! Judges are on record as saying that major tax litigation is not for the faint hearted. Costs can easily extend into the many tens of thousands of dollars on a tax challenge and the more complex the matter the more expensive this will be. This makes it vital that you engage counsel who knows the ropes and can work most efficiently for you.
 

A tax challenge is dealt with by a Judge alone. The TRA is also a sitting District Court Judge and a High Court challenge is presided over by one of that Court’s Judges. Tax prosecutions can be tried before a jury (see below).
 

This is the process by which parties to civil litigation list and disclose to the other side all the documents in their possession and control which could assist either party’s case. Although documents will often have been disclosed to the IRD in the course of an investigation the lawyers who act for the IRD in tax litigation routinely require full discovery. This can be a time consuming and frustrating process because it requires a careful examination of records, including emails and electronic documents, to be sure all are covered. Discovery normally leads to document bundles being exchanged and often to an agreed bundle of documents that is put before the Judge.
 

This depends on how long the case is likely to take and how busy the TRA or the High Court is. It is not unusual for fixtures to be available 6 months or more from when a case is ready to be set down. This is part of the reason why cases are managed by the Judges, to be sure that they can be brought on for hearing as quickly as practicable.
 

The challenge normally starts with an opening by the taxpayer as plaintiff which explains the taxpayer’s case. The taxpayer’s evidence is then led for witnesses. Normally evidence is submitted by witness statements or briefs in writing. These are read into the record. When a witness has given his or her evidence, opposing counsel cross examines and then the Judge can ask any questions he or she may have. The process is then repeated for the IRD. The challenge concludes with each side making legal submissions and a closing argument. Again in most cases this is prepared in writing. Unless the Judge believes that a judgment can be given immediately the decision will be “reserved”, ie the Judge will take time to consider it. The decision is normally rendered at a later stage when the registry of the TRA or the Court sends the written decision to each side by email.
 

An appeal should be notified within 30 days of a TRA or High Court decision being given. If the appeal is from the TRA it is to the High Court. If it is from the High Court, it is to the Court of Appeal. In cases which involve matters of principle and importance an appeal may be taken from the Court of Appeal to the Supreme Court. That appeal must have the leave or permission of the Supreme Court.