Contributed By Old South British Chambers
New Zealand has a self-assessment tax system. Taxpayers who derive income from which tax is not fully deducted at source file an annual return of their income and tax liability to Inland Revenue/Te Tare Take (IR). Most tax controversies arise when IR disputes the position returned by a taxpayer, usually as a result of some anomaly detected by audit. However, tax controversies can also be initiated by the taxpayer, when a taxpayer wishes to adjust an earlier tax position or disclose previously undeclared income.
Tax controversies can also arise from administrative decisions, such as registration for goods and services tax (GST), the equivalent of VAT, or refusal of financial relief. Inquiries by IR, investigations and audits can all give rise to controversy because of IR’s wide powers.
For most New Zealand taxpayers, tax is collected unobtrusively on their behalf. A “Pay As You Earn” (PAYE) withholding system ensures that employed taxpayers correctly pay tax on wages and salaries, because it is withheld by their employers. Similarly, some contractor payments and all bank interest income are subject to tax withholding.
GST is included in the price for most purchases, and levies are included in fuel prices. This results in a system where correct compliance is straightforward and automatic for most taxpayers. Most tax controversy arises in relation to taxes whose collection relies on voluntary compliance by taxpayers, especially company and business taxpayers. Controversy arises from IR action to identify potential tax risks including risk reviews, audits and investigations.
The statutory tax disputes process, which is summarised in 3. Administrative Litigation, exists both to reduce the instances of tax controversy and to facilitate resolution when tax controversy does arise. IR undertakes risk reviews in which it will often invite voluntary disclosure of tax discrepancies with the promise of reduced penalties to avoid or mitigate controversy.
New Zealand has embraced BEPS initiatives enthusiastically. It has adopted the updated OECD model tax convention and signed the multilateral convention (MLI). It has also legislated an all-encompassing approach to prevent multinationals from aggressively reducing their New Zealand tax liability. From 1 July 2018, new laws introduced a permanent establishment anti-avoidance rule, strengthened the transfer pricing and thin-capitalisation rules, introduced new rules to tax hybrid and branch mismatch arrangements, and increased IR’s already broad information gathering powers.
Restricted transfer-pricing rules for inbound party-related debt were also introduced, departing from the arm’s-length principle in favour of prescriptive interest rate rules aimed at preventing a “BEPS risk”. The Government is considering introducing a digital services tax aimed at multinational providers of digital platforms in New Zealand, although the approach will likely be shaped by OECD policy and international consensus.
It is too early to say how BEPS initiatives will affect tax controversy. However, it is widely accepted that the legislation is complex and likely to lead to an increase in compliance issues and costs. Its complexities may well offer avenues for challenge. However, since being enacted there has been little activity by IR specifically applying these reforms. That is largely because for much of the last two years, IR has been preoccupied with administering important element of the government’s COVID-19 response.
In most cases, a taxpayer does not need to pay a tax reassessment before being able to challenge it, although if a taxpayer is unsuccessful in a challenge, late payment penalties and interest will continue to be charged until payment. Where there is a risk of eventual non-payment, IR can require some or all of the tax to be paid. In some extreme cases, IR can apply to freeze assets pending the disposition of a pre-assessment dispute or a challenge. Before being able to challenge a default assessment (ie, an assessment raised in the absence of a tax return), both the relevant return and a notice of proposed adjustment must be filed to provide a threshold explanation of the taxpayer’s position.
Criminal law consequences can arise from non-payment of tax. Civil disputes are normally suspended pending the outcome of criminal proceedings to preserve fair trial rights. In these proceedings, whether or not tax has been paid (albeit late) is an important factor in sentencing upon conviction. Criminal proceedings often, therefore, prompt payment even if civil liability has yet to be fully determined. If tax evasion charges are laid, that can adversely affect the extent to which IR can compromise over civil tax debt.
IR applies its investigation resources carefully. Those resources are extensive, and IR’s forensic capabilities have been upgraded very substantially over a period of six years in which a new system called START (simplified tax and revenue technology) has been launched.
In theory, IR may audit any taxpayer subject to a time bar. In reality, however, most taxpayers are never audited – primarily because of the efficiency of the PAYE, withholding and GST collection mechanisms. Structurally, IR focuses on three taxpayer categories: individuals, small to medium-sized enterprises and significant enterprises or businesses.
IR uses increasingly sophisticated diagnostic tools to identify taxpayers for audit in each category, together with information from third parties such as banks and the oft-quoted anonymous “tip-off”. Public records, social media, business filings and advertising all contribute to “tax intelligence”. A poor compliance or payment history can increase the likelihood of an audit, and certain taxpayers and industries that are considered “high risk” because of their relative ease of suppressing income may be targeted more often.
These include businesses trading significantly in cash, such as tradespeople, taxpayers trading in land, and taxpayers with overseas bank accounts. IR may also audit taxpayers in a particular geographic area. As an example, businesses in certain agricultural and horticultural regions may become targets because of the prevalence of tax evasion amongst certain work groups with which the businesses may operate.
High net worth individuals and significant enterprises are a perennial target of IR. For these taxpayers, risk reviews and audit are more likely to be prompted by unusually complex structures, unorthodox financing transactions, uncertainty over compliance by controlled foreign companies and foreign trust structures, transfer pricing or BEPS issues. IR has initiated a controversial survey of high net worth individuals’ effective tax rates with a view to future tax policy changes.
IR does not need to give notice of an audit in order to require taxpayers to supply records. For example, IR officers can make unannounced visits to check payroll and GST records. Audits are often preceded by a “risk review”, where IR requests information to review, with a view to assessing the risk of non-compliance. If a risk is detected, the taxpayer will be notified that an audit will commence. The formal notification of the commencement of an audit is an important step in relation to possible discounts from civil penalties that are available for voluntary disclosures.
The length of audit depends on the issues and tax types involved, the records to be reviewed, the complexity of the taxpayer’s affairs, the quality of the taxpayer’s records and the co-operation of the taxpayer. Complicated audits may run for several years.
There is no time limit for initiating an audit, but a time bar on IR’s ability to increase a taxpayer’s liability means that an audit must be started and concluded in a timely way. Usually, IR can only increase an assessment within four years of the end of the income year, or other tax period, in which the relevant tax return was filed. Thus, if an income tax return is filed in the year to March 2022 for the income year ended March 2021, an assessment increasing the liability for 2021 cannot normally be made after 31 March 2026. That time bar can be lifted in the case of fraudulent or wilfully misleading returns, or if a particular type or source of income was not originally declared.
If the time bar is lifted, there is legally no time limit on IR’s ability to reassess, but administratively IR will not normally reassess for more than ten years. The four-year time bar is generally considered to be positive for taxpayers and IR as it offers certainty for when an assessment will be considered final, but it can also drive an audit to a conclusion when IR wants to prevent an income tax year “falling out” of time, and that can be disadvantageous. Because of this, a process of time bar waiver is available to taxpayers.
As more taxpayers move to exclusively digital record-keeping, off-site audits have become more common. Taxpayers are often asked to provide digital information (including computer hard drives) as part of an initial information request. When IR makes unannounced visits to obtain records, computer hard drives are routinely copied, subject to steps being taken to protect material that could be subject to claims of legal professional privilege or tax advice non-disclosure (a parallel protection for accountants’ tax advice). The interrogation of such information, assisted by audit software, allows IR to target later information requests.
While this shift to digital audits is underway, many audits are still carried out by exchange of paper documents. Sometimes, IR will still review information at a taxpayer’s premises for ease of communication and accessibility of documentation. The questioning of taxpayers may occur voluntarily or compulsorily, with different legal consequences applying in each case. Compulsory interviews will normally occur on IR premises and under oath.
Threshold administrative requirements apply to some aspects of IR’s audit inquiries. For example, a private dwelling may not be entered without a court-issued warrant, and removal of records while IR has access to any premises also requires a warrant. These processes are subject to general law governing search, seizure and surveillance in New Zealand. Tax auditors must take special care over these matters, and they are also prime considerations for advisers assisting taxpayers under audit. Rights of silence, privilege and tax advice non-disclosure must be respected by IR and, again, are a focus.
IR will usually start by reviewing accounting records, contracts, invoices and bank accounts. IR often contacts third parties, such as accountants, banks, suppliers and employees, if it needs further information. It is worth noting that private activities and information are not “off limits” in an audit. IR may review private activities and records to substantiate a taxpayer’s correct tax position. In most cases, auditors place importance on meeting taxpayers, including company officers, face to face. This begins as an opportunity to understand the way in which the subject business operates and who is responsible for tax compliance. Such face-to-face dealings can be extensive, though many taxpayers prefer to limit “exposure” to IR by working through their tax agents or advisers.
NZ has committed to the OECD’s Automatic Exchange of Information (AEOI) regime, and the Common Reporting Standard (CRS) came into effect in NZ on 1 July 2017. Affected banks and other financial institutions were expected to identify foreign tax residents and report their financial account information for the initial reporting period ending 31 March 2018, due to IR by 30 June 2018.
The first exchange of information between the revenue authorities from reportable jurisdictions occurred on 30 September 2018. The new cross-border exchanges of information increased audit activity. IR has issued a number of risk review letters as a result of being advised that a New Zealand tax resident has an account overseas. These have led to voluntary disclosures, to pre-empt audits and reduce associated penalties. This process is ongoing.
The following 12 points summarise some key considerations during a tax audit in New Zealand:
If a tax issue cannot be resolved informally, it is dealt with under a prescribed statutory tax disputes process. This can loosely be called the “administrative phase”. Except for certain cases, IR cannot make a new tax assessment until the disputes process has substantially been carried out. This process is designed to refine tax disputes, identify issues, disclose facts and ensure communication between the taxpayer and IR. The aim is to resolve disputes without litigation if possible, but if litigation is necessary, to avoid either side being ambushed.
The tax disputes process can be initiated by either the taxpayer or IR and is largely the same, regardless of who starts it. If the tax disputes process does not resolve the issue, the affected taxpayer may litigate the resulting assessment. The process is mandatory in that a taxpayer may not challenge an assessment unless the parties have engaged in the disputes process, at least to the point where their respective positions have been established to a minimum extent.
The tax disputes process follows prescribed steps. Either party will issue a notice of proposed adjustment (NOPA) outlining proposed adjustments to a tax position and detailed factual and legal reasons for them. The other party then has an opportunity to respond with a notice of response (NOR). When the parties disagree, this initial exchange is followed by a conference, often facilitated by a senior IR officer not connected with the case. If the taxpayer opts out of the conference stage (with the permission of IR), or the conference does not reach a satisfactory resolution, then IR will issue a disclosure notice and a statement of position (SOP) to the taxpayer. The SOP outlines the facts, documentary evidence and law that supports IR’s position. The taxpayer supplies a responding SOP.
The disclosure notice triggers a statutory limitation on the issues and the propositions of law that can be contested in any subsequent judicial litigation. Because the taxpayer bears the burden of proving its case, it is crucial at this stage that all appropriate facts, evidence and legal arguments are put forward by it. In most cases, SOPs exchanged by the parties are then referred to IR’s disputes review unit (DRU) for adjudication. Though part of IR, the DRU is independent of IR’s investigators and must decide whether or not the position advanced by the investigators is correct. Should the DRU decide in the taxpayer’s favour, the matter is closed. However, if the DRU upholds IR’s position, the taxpayer may challenge a resulting assessment in the Taxation Review Authority (TRA) or the High Court, discussed further at 4. Judicial Litigation: First Instance. The imposition of penalties in respect of any assessment is discussed in 7. Administrative and Criminal Tax Offences.
Although there are strict deadlines as part of the tax disputes process, there is no time limit for it to conclude, apart from the statutory four-year time bar for tax reassessments. The disputes process takes about 635 days to complete on average, not including the initial information requests and investigation. A brief summary of the key time periods for the tax disputes process follows, but exceptions and variations are numerous and very fact-dependent. Many of the timeframes referred to below are administrative targets set by IR. Statutory timeframes apply to the exchange of formal notices and statements of position.
Initiating a Dispute
If IR is initiating the tax disputes process, it will usually alert a taxpayer that a NOPA will be issued about five days beforehand, and will confirm receipt about ten days after it has been sent. The taxpayer will be required to file their responding NOR within two months of the NOPA’s issue. IR will confirm if the taxpayer intends to file a NOR about two weeks before the response period expires. If IR considers that exceptional circumstances have prevented the taxpayer from responding in time, then it can deem the response to have been received “in time” and has a month to issue a determination to that effect or decline to do so. If out of time, the taxpayer is deemed to have accepted IR’s NOPA. The taxpayer’s NOR is otherwise assigned to an officer within about five working days of receipt, and receipt of the NOR is acknowledged within ten. Within a month, IR will advise the taxpayer if the NOR is accepted, rejected, or still being considered. Acceptance at this stage would finalise the tax disputes process and an amended assessment can be issued if the agreed position requires it.
Rejection or Consideration
If the NOR is rejected or under consideration, IR can invite the taxpayer to participate in a conference, and to have that facilitated by a senior IR officer independent of the case officers. The taxpayer usually responds to this invitation within two weeks, though on more complicated matters this can take substantially longer. The taxpayer has the right to request to opt out of the tax disputes process and proceed straight to litigation by way of a tax challenge within two weeks of the end of the conference phase. IR has three months to decide if it will allow the request to bypass the tax disputes process and proceed directly to litigation. If the taxpayer accepts the invitation to a conference, IR will come back within about two weeks to confirm the structure of the meeting and when it will occur. The conference phase usually takes about three months.
If the conference phase is unsuccessful, IR will usually issue a disclosure notice within three months, and its SOP (although there is no requirement for it to do this within any timeframe). The taxpayer must issue their responding SOP within two months of receiving IR’s SOP; the applicable timeframes can be extended if the circumstances justifying the taxpayer’s delay are sufficiently “exceptional”. Exceptional circumstances are usually outside of the taxpayer’s control. Failure by a taxpayer to issue a responding SOP within time, without an extension, will result in deemed acceptance of IR’s SOP.
If the SOP is received in time from the taxpayer, IR has two months to provide an addendum to its SOP. The taxpayer can request to add further information to their SOP, at IR’s discretion. Within one month of the addendum, IR will usually determine if the matter will be further escalated to the DRU. The materials to be sent to the adjudicator will be agreed with the taxpayer; if no agreement is reached after ten days, IR will supply the materials to the DRU. Importantly, the DRU considers matters only “on the papers” and will not independently assess witness credibility.
If IR and the taxpayer cannot reach agreement through the tax disputes process, judicial tax litigation “challenge” proceedings can be commenced by the taxpayer within two months of the relevant tax assessment being confirmed. There is a right of challenge against most decisions of IR following the tax disputes process. However, a taxpayer cannot challenge an assessment without first completing at least part of the tax disputes process. As outlined at 3. Administrative Litigation, an opt-out request can be made within two weeks of the conference phase ending, so that a challenge can be commenced without completing the disputes process.
On rare occasions, a taxpayer may seek judicial review if IR has reached a decision or exercised a discretion based on irrelevant considerations or without taking relevant considerations into account. Judicial review can also be available where a matter cannot be subject to a tax challenge. Review must be brought in the High Court, as it is beyond the TRA’s jurisdiction. The TRA and the Court generally require a procedural claim to be brought alongside any substantive tax challenge, to avoid the risk of taxpayers artificially “gaming” the system to delay a substantive decision on tax liability.
The TRA and the High Court (each called a “hearing authority” for tax purposes) are the first judicial forums available to a taxpayer wishing to contest the outcome of the tax disputes process. The TRA is a tribunal that hears only tax challenges. Its proceedings are not open to the public, and published decisions have all identifying details removed. In the past, TRAs have been District Court Judges, although the appointee need not be one and the current TRA is an experienced tax barrister. The TRA can receive any evidence it considers may assist in its decision, even if such evidence would not be admissible in the High Court. Costs cannot generally be awarded against an unsuccessful litigant in the TRA. The cost of litigating in the TRA can be less than in the High Court, though that is not always so.
The High Court is not a specialist tax court but is the forum in which all significant and/or complex litigation should be heard at first instance. The High Court is not obliged to deal confidentially with tax matters and generally the principle of open justice prevails. In this Court, costs are routinely awarded against the unsuccessful party.
Both hearing authorities have all of the powers, duties, functions and discretions of IR when hearing and determining a tax challenge. Although advocates must adhere to the usual rules of evidence, in both forums a taxpayer may appear for themselves, often with considerable assistance from the Bench.
Judicial tax litigation follows the same procedure as other civil claims. The timetable for a hearing in either the TRA or the High Court is set by the Judge, usually in accordance with a proposal by the parties. Written briefs of evidence are filed with the court and served on the opposing party in advance of a hearing to outline the evidence in chief, and bundles comprising documentary evidence and legal authorities are usually agreed by the parties. Most hearings continue to be paper-based, but electronic document management is being introduced in the High Court and is already more prevalent in the appellate courts.
Very briefly summarised, the steps for first instance tax litigation are as follows. (The language reflects the High Court but similar procedures apply in the TRA.)
A notice of proceedings, with a statement of claim and key documents from the tax disputes process is submitted to the Court by the taxpayer, who is plaintiff in the proceedings, and is served on IR as defendant. The statement of claim outlines the general nature of the challenge, including a brief factual background (usually by reference to the dispute documents already exchanged between the parties), and concludes with the remedy sought.
IR files a statement of defence, responding to the taxpayer’s case. Once these statements are with the Court, a timetable is set as part of standard case management. This can extend to the full range of interlocutory steps, including the pleading of particulars, orders for discovery and interrogatories. The parties then collate and file evidence. Written summaries of the evidence in chief to be given by witnesses, together with any documentary exhibits, are submitted by each party to the Court. Expert witnesses usually file a technical report supporting their findings. Special rules apply to their evidence.
At the hearing, following an opening statement from the taxpayer, evidence at the trial is presented orally, with briefs of evidence usually being read into the record by the witnesses under oath, including references to exhibited supporting documents. It is not unusual for briefs or summaries of evidence to be supplemented by further evidence in chief, led orally. This is followed by cross-examination and re-examination. The same pattern then follows for IR. Closing statements presented to the Judge signal the end of the trial. The Judge will normally take time to deliberate, sometimes in the order of months, before a detailed written decision is issued.
As noted in 4.2 Procedure of Judicial Tax Litigation, evidence in chief must be provided in a written brief to the courts and the other party in advance of the hearing. These are read into the record during the trial, and documentary evidence is produced by way of exhibit. This evidence is crucial for presenting a party’s argument or rebuttal, and is usually the only opportunity to produce the evidence on which the taxpayer relies. In tax proceedings the onus of proof lies with the taxpayer-disputant, so the production of evidence sufficient to discharge that onus is vital.
In complex tax avoidance cases, it is not unusual for the Court to receive a great deal of evidence, including expert evidence on matters such as valuation, business orthodoxy, commercial outcomes and rationale. All necessary evidence should be produced at first instance because the opportunities to introduce further evidence on appeal are very limited.
In some cases, it is possible to agree statements of evidence and to have them admitted without contest. This is not usual and occurs only when the matter is essentially an argument of law.
The burden of proof in civil tax matters rests with the taxpayer (except for certain civil penalties outlined below, where it rests with IR), to establish their case on the balance of probabilities. The burden of proof in criminal matters rests with the prosecution, which must prove its case beyond reasonable doubt.
As with every kind of complex civil proceeding, there are myriad strategic matters to consider in preparing for and conducting tax litigation. The following paragraphs are not exhaustive.
Choice of forum – it is the taxpayer’s choice to commence a tax challenge in the TRA or the High Court. The relevant factors have been canvassed.
What does success “look like?” This will shape the way litigation is undertaken, particularly if a negotiated outcome is preferred.
Preparation and presentation of witnesses – crucial when the burden lies with the taxpayer. Do not assume the taxpayer knows anything or, if they do, that they know how to explain it!
Expert witnesses – in a small country, the catchment for some witnesses is small and their evidence well known. Care is required and expert testimony from outside New Zealand may be needed. Be careful not to have experts usurp the court’s role.
No surprises litigation means exactly that – do not try to ambush with unseen documents or evidence. The system is designed to exclude this, so this type of strategy will count against the side that tries it.
New Zealand follows an English common-law litigation tradition. Precedent is important. When considering an international tax matter, a Court will consider international jurisprudence, doctrine and commentary. However, the persuasiveness of such material can vary. Decisions of foreign courts are rarely directly relevant to NZ tax litigation, although analogies can often be made. Australian tax cases are often considered persuasive, depending on the status of the court, because Australia and New Zealand have overlapping areas of tax law and a similar colonial legal history. Similarly, UK and Canadian case law is often considered persuasive by the courts, depending on the subject at hand. An advocate must carefully consider the relevance of international case law in tax litigation, particularly if it relates to “classic” issues such as the revenue/capital distinction.
Double taxation agreements (DTAs) are part of New Zealand’s domestic law and have an overriding effect on it. As a result, if domestic law and a DTA conflict, the DTA takes precedence. New Zealand courts will usually consider OECD commentary when interpreting DTAs, as New Zealand DTAs are based on the OECD model commentary.
A decision of the TRA can be appealed to the High Court. A decision of the High Court can be appealed to the Court of Appeal, and then, with leave, to the Supreme Court. The Supreme Court is New Zealand’s final appellate court.
An appeal of a TRA decision to the High Court will only lie if the amount of tax involved is greater than NZD2,000, the net loss is at least NZD4,000, or the appeal relates to questions of law only. Otherwise, TRA decisions are final. An appeal to the High Court must be commenced within one month of the disputed TRA decision.
An appeal from the High Court to the Court of Appeal can be on a question of fact and/or law. Either party can appeal from the High Court to the Court of Appeal as of right, but the Court of Appeal seldom receives new evidence, or takes up a point of law not previously raised. An appeal must normally be brought within 20 working days of the appealed decision.
An appeal to the Supreme Court requires leave. The Supreme Court will only hear matters of general commercial significance, or general or public importance. If leave to appeal is declined, the Court of Appeal’s decision is final. The Supreme Court seems disinclined to regard many tax appeals as meeting the threshold for leave to appeal, although one significant avoidance case has leave and is awaiting hearing.
The appeal procedure follows the general appeal process already summarised, with some deviation for interlocutory matters. An intended appellant must file a notice of appeal, specifying the findings of fact and rulings being appealed. The appellant then collates a case on appeal, comprising all the material before the lower court. Both the appellant and respondent then file a synopsis of their submissions. Further evidence can be supplied in exceptional circumstances – namely, if something that substantially changes the correct application of the law has arisen since the lower court heard the case.
In most cases an appeal is by way of a rehearing. That does not mean, however, that the case is actually reheard. Instead, the appellate court undertakes a full review of the record of evidence and submissions relating to the case and arrives at a fresh determination of the matter. One downside of this system is that judges in the appellate court will not necessarily be able to assess the credibility of witnesses and instead rely on written transcripts of evidence.
At first instance, civil tax cases are heard by a single judge in the High Court or by a single TRA. Appeals to the High Court from the TRA are heard by a single High Court Judge. Criminal tax cases are often heard by a single judge in the District Court, though more serious criminal tax matters may be heard before a Judge and jury. In the Court of Appeal, the bench usually consists of panels of three to five judges, often with two High Court Judges seconded to support a Court of Appeal Judge. If the Court of Appeal is being asked to overturn one of its own judgments or is dealing with a particularly precedential matter, a bench of five judges can be requested. In the Supreme Court, a full bench of five judges considers all matters.
The allocation of judges to a matter is usually in the hands of the executive judge in each court or the relevant Head of Bench, and will take into account the overall capacity of the Court and the capacity of the individual judges. There are no specialist tax judges in the High Court, Court of Appeal or Supreme Court, although one sitting Supreme Court Judge practised as a tax partner in a major law firm some 20 years ago.
The disputes process, specifically the conference phase described in 3.1 Administrative Claim Phase, is closest to arbitration, mediation and other alternative tax dispute mechanisms. New Zealand does not have any other alternative dispute resolution regime covering tax matters. This has been criticised by some tax commentators. However, New Zealand does have a comprehensive binding ruling system to avoid the need to take a tax position that IR could contest; see 6.4 Avoiding Disputes by Means of Binding Advance Information and Ruling Requests.
New Zealand does not have an alternative dispute resolution regime covering tax matters.
New Zealand does not have an alternative dispute resolution regime covering tax matters.
Any taxpayer can apply for a binding ruling, seeking IR’s confirmation that the taxpayer’s interpretation of tax law applicable to a specified actual or contemplated transaction is correct. However, this is an expensive and time-consuming process, requiring in-depth analysis of tax law. As a result, IR recommends using a tax professional. Therefore, most binding rulings are sought for complicated matters with substantial sums in issue. A binding ruling is binding on IR and, therefore, it is crucial that the facts and law of the situation are very clearly explained in the ruling application and followed to avoid a later reversal. IR is not bound by a ruling if the facts of the arrangement as implemented materially differ from those in the ruling, or if there has been an omission or misrepresentation by the applicant, or if assumptions prove to be incorrect or a stated condition is not complied with. While IR must otherwise comply with a binding ruling, the taxpayer can dispense with it at any time.
Because of the barriers to obtaining binding rulings, IR introduced “short-process rulings”. Short process rulings have been available since 1 October 2019. Taxpayers with an annual gross income of NZD20 million or less can apply for a short process ruling. The query must relate to less than NZD1 million of tax, and to only one type of tax. At the time of writing (April 2022), a short-process ruling costs NZD2,000 and takes about six weeks from submission to IR to the ruling being issued. For small and medium sized businesses, which short-process rulings target, short-process rulings offer certainty without the cost of the binding ruling process.
New Zealand does not have an alternative dispute resolution regime covering tax matters.
New Zealand does not have an alternative dispute resolution regime covering tax matters.
Any breach of a tax obligation can lead to a civil penalty and criminal liability, or both.
A tax default will usually result in late payment penalties (LPP) and short-fall penalties (SFP). In the case of employer-related tax deductions that have not been made, IR may notify special “non-payment” incremental penalties which are capped at 150% of the unpaid sum. Additionally, use of money interest (UOMI) applies, but this is expressly not a penalty under statute.
SFPs are a one-off charge calculated as a percentage of the tax shortfall according to the perceived culpability of the taxpayer’s default. Not every default attracts a penalty but, in practice, most do. SFPs range between 20% and 150% of the tax shortfall to which they relate. SFPs are assessed after an investigation has been completed and are subject to internal “consistency” oversight by IR. They can be disputed and challenged in the same way as substantive tax.
Criminal charges can be laid by IR alongside civil tax proceedings, although criminal proceedings will normally take priority, to avoid civil proceedings compromising a taxpayer’s fair trial rights.
Penalties arise in three categories of tax offending: absolute liability offences, knowledge offences and offences of or similar to tax evasion.
Absolute liability offences relate to basic expectations of compliance and are sanctioned by fine. Knowledge offences occur when a person knows of a tax obligation and fails to meet it. These offences are more serious and have a graduated fine regime. They can also attract a sentence of up to five years’ imprisonment. Evasion of similar offending is the most serious class and occurs when an act or omission occurs knowingly, but also with the intent to evade assessment or payment of taxes. While these offences share the upper limit of imprisonment for knowledge offences, they are often charged under the Crimes Act, where potentially longer prison terms can be imposed.
Sentences for tax offending are imposed under comprehensive laws designed to apply a scale of sanctions from financial punishments at the lowest level, through non-custodial community work, community and home detention, to a term of imprisonment for serious offending. Company officers can be criminally liable as parties to any tax offence committed by their company.
The civil tax disputes process can run concurrently with a criminal process. However, to protect fair trial rights, the Court of Appeal has strongly indicated that a civil dispute or proceedings should not be conducted ahead of criminal proceedings. That approach has recently been confirmed in a case where criminal proceedings were vacated because IR’s civil procedures had compromised the criminal defence. In practice, therefore, IR will usually stay the disputes process and any related civil proceedings, often after the NOPA and NOR have been exchanged, to first complete criminal proceedings. That may change because the exchange of any notices in a civil dispute could conceivably compromise a criminal defence. Typically, IR resumes civil processes once the criminal matter has been disposed of, including the consideration of shortfall penalties which, if not imposed before prosecution, may be imposed in addition to criminal sanctions.
The civil tax disputes process can lead to the imposition of civil penalties by way of SFPs and/or result in criminal charges being laid, though the timing of each can be an issue as noted in 7.2 Relationship between Administrative and Criminal Processes. The decision whether or not to prosecute is taken seriously within IR and is made against relatively well-publicised prosecution guidelines issued by both the Solicitor General and IR. The way the SFP regime and criminal offence provisions work together can lead to anomalies.
As noted in 7.1 Interaction of Tax Assessments with Tax Infringements, if IR first imposes an SFP, it may not later choose to prosecute the taxpayer for the same default. However, if that taxpayer is first prosecuted, then a SFP can still be imposed even if the taxpayer has been acquitted in the criminal prosecution. Time bars do not normally apply to the imposition of SFPs, so the option to follow criminal proceedings with a civil penalty is usually available. Although IR asserts this is seldom done, the authors’ experience is that it occurs enough to be concerning.
A civil penalty will usually be proposed by IR, using the tax disputes process. It does not need to be resolved at the same time as a proposed substantive tax liability. The taxpayer can oppose the proposed imposition of the penalty through the tax disputes process and by a tax challenge in the TRA or the High Court.
Criminal charges are usually laid in and dealt with by the District Court. The TRA does not have a criminal jurisdiction. Once the charges are laid, the usual criminal process follows, under which the prosecution adduces evidence, which the defence tests.
The prosecution carries the burden of proving any tax offence beyond reasonable doubt, and the taxpayer is not obliged to give evidence. In reality, if there is a contest over the extent of a tax liability in criminal proceedings (usually a matter for sentencing), that will be resolved in a disputed-facts hearing. To establish criminal liability, IR does not normally have to show the precise and correct liability or the precise sum evaded; it only needs to show that the taxpayer’s position was wrong and that this was taken with the requisite knowledge and intent.
While an upfront payment of tax will not result in a reduction of penalties other than LPP, SFP can be reduced by statutory reductions for prior good behaviour and voluntary disclosures. Voluntary disclosures can be either “pre-notification”, if made before IR notifies the taxpayer of an audit, or “post-notification”, if made after an audit has been notified but before investigation has commenced. A pre-notification disclosure came with an assurance of non-prosecution until March 2019.
IR has amended its position on non-prosecution, stating that future disclosures of serious, evasive or fraudulent behaviour may still be prosecuted in extremely rare circumstances. The effect of this new policy has yet to be tested. The new approach means that in serious cases of evasion the disclosure process has to be carefully managed. A pre-notification disclosure qualifies for a 100% reduction of lower level SFPs, and a 75% reduction for all higher penalties. For post-notification disclosures, a flat 40% deduction is given for all SFPs.
Further reductions are available if a taxpayer can show that financial hardship would arise from continued collection of outstanding tax or penalties. This includes illness, or if the taxpayer would not be able to meet minimum living standards, according to normal community standards of cost and quality. IR has tabulated the expected costs of minimum living expenses, against which applicants can judge their likelihood of success should they make a claim of serious hardship. SFPs levied for evasion or similar default cannot be written off other than in the taxpayer’s bankruptcy or liquidation. The impact of this on negotiations for settlement of civil tax liability can be serious.
While IR can write off interest, UOMI is very rarely reduced as it is intended to compensate IR for the loss of opportunity created by the late payment.
Where tax has been assessed and is also the subject of criminal charges, payment of at least the core tax in question is an important factor in sentencing for the criminal offence. Although several factors will be relevant, reparation of evaded tax can often be the difference between a custodial and a non-custodial sentence being imposed.
Mitigating submissions are often made to IR as it considers whether or not to prosecute a taxpayer. As noted, that decision is made according to well-publicised guidelines to which submissions must be directed. Once the decision to prosecute has been made by IR or in serious cases by the Crown, payment of tax penalties and interest is not sufficient in itself to prevent a trial.
The Supreme Court has made it clear that a payment to procure non-prosecution is void as against public policy. It is still possible to seek the withdrawal of a prosecution, once commenced, but there must be supporting grounds other than the payment of tax. These will usually be grounds that were not adequately considered at the time the original decision was made. Though charges will not often be withdrawn completely, it is not unusual for them to be replaced with lesser charges to reach an agreed disposition of the case consistent with a prudent use of IR and court resources.
The appeals process for criminal trials follows the same steps as those outlined in 5. Judicial Litigation: Appeals; however, criminal matters are usually first heard in the District Court and can then be appealed to the High Court. An appeal in the High Court is by way of a rehearing and can result in a different decision. An appeal may be against conviction or sentence or both.
Sentencing appeals are unlikely to be successful unless an appellant can establish that the sentence was manifestly excessive, or that material new information has come to light since the first instance trial. As judges have significant discretion when making sentencing decisions, appeals are allowed only in cases where it is clear that the court at first instance has made an error.
Tax avoidance and transfer pricing are not criminal offences under New Zealand law, but tax defaults can in both cases be subject to a civil SFP. The concept of tax avoidance only engages if the relevant position otherwise meets the requirements of tax law. It is normally too difficult to establish the necessary element of dishonesty for transfer pricing to give rise to an offence.
A taxpayer found to be in breach of the general anti-avoidance rule (GAAR) or a specific anti-avoidance rule (SAAR) or transfer-pricing rules will therefore not face criminal charges but could challenge IR’s assessment of a SFP through the tax disputes process and challenge proceedings.
A promoter of a tax avoidance arrangement can be liable for special penalties, imposed if an abusive tax position has been offered, sold, issued or promoted to ten or more persons in a tax year. This penalty is the sum of all tax shortfalls resulting from the promotion of the abusive tax position.
There is an ongoing debate regarding whether something done that is so obviously tax avoidance that it will inevitably be set aside is done dishonestly so as to attract criminal sanction. That has yet to be resolved.
A taxpayer in New Zealand can initiate the domestic tax disputes process concurrently with an application to the competent authority under the relevant DTA, to engage the mutual agreement procedure (MAP). The MAP sets out how New Zealand’s competent authority will liaise with the competent authority of another affected tax jurisdiction to determine the correct application of the DTA to the taxpayer. Alternatively, IR can initiate this process with another contracting state to resolve foreseeable issues of interpretation.
If the domestic tax disputes process results in a court decision, the New Zealand competent authority is bound by this decision, and must defend and explain the NZ position to other affected tax authorities.
Arbitration is available to New Zealand taxpayers when the applicable DTA contains the current model Article 25(5). The only New Zealand DTAs with an arbitration clause are with Australia and Japan.
New Zealand has accepted the arbitration article in the OECD’s MLI. The MLI introduces arbitration clauses if the corresponding countries have also adopted the relevant arbitration article. If the competent authorities cannot reach an agreement within two years, the taxpayer can request arbitration. However, if the model Article 25(5) is not present in the applicable DTA, the taxpayer can still apply for arbitration, granted at the discretion of the tax authorities involved.
Because of the complexities often involved, most taxpayers facing the prospect of double taxation as the result of IR action in New Zealand will try to have IR engage with an affected overseas tax authority sooner rather than later.
It is too early to assess how the measures adopted under the MLI will affect New Zealand practice concerning double taxation. While the EU Tax Disputes Directive is an interesting backdrop to the issue, it has no direct influence or impact on New Zealand practice.
Until recently, New Zealand’s DTAs and its GAAR appeared to conflict. DTAs may override domestic law. The GAAR voids for tax purposes any arrangement with a “more than incidental purpose” of obtaining a tax benefit. IR considered a DTA to not override the GAAR, or an applicable SAAR, so both can apply to an international tax dispute. Following recent amendments, the GAAR may now expressly apply to override relief that would otherwise be available under a DTA. This does not align with the Australian, UK or Canadian approach, as these countries specifically legislate to allow DTAs to override their GAARs.
New Zealand has opted for the principal purpose test (PPT) in Article 7(1) of the MLI as the mechanism for countering treaty abuse. However, most commentators and practitioners consider that the PPT is likely to have a similar effect to the GAAR. Accordingly, adopting the PPT is unlikely to have a major impact in practice. The GAAR is likely to remain the focus of the New Zealand Courts.
New Zealand’s transfer-pricing rules are enacted in domestic law. The recent extension of these rules following the OECD’s BEPS initiatives is briefly discussed in 1.4 Efforts to Combat Tax Avoidance. These would apply to an international transfer pricing adjustment challenge, and must be interpreted in light of the OECD’s transfer pricing guidelines, although they do not directly apply.
Transfer-pricing issues are not often litigated because most taxpayers prefer to resolve such issues between jurisdictions without resorting to litigation.
To illustrate this, IR noted in its 2021 annual report that a key focus area has been monitoring the effectiveness of measures to target base erosion and profit shifting by multinationals operating in New Zealand. IR noted that its monitoring focused on 248 organisations, selected on the basis of their high risk to NZ’s tax base. IR observed a significant curtailing of aggressive tax planning, including a major reduction in the levels of non-resident associated party debt. For example, IR monitored 37 multinationals with high debt levels and found their non-resident associated party debt fell by NZD377 million in the 2019 tax year, following a similar decline in 2018.
Unilateral advanced pricing agreements (APAs) are obtained using the binding ruling regime (see 6.4 Avoiding Disputes by Means of Binding Advance Information and Ruling Requests). Bilateral APAs are issued following the relevant DTA’s MAP article. IR increasingly favours APAs for businesses dealing in intangibles, where the correct tax treatment could otherwise be contested.
The process for completing an APA involves a pre-application, which involves a short, written proposal outlining the factual background and the suggested transfer-pricing arrangement. This is usually followed by a brief meeting between the taxpayer and IR to discuss the proposal. The APA request is then formalised and submitted to IR for review.
IR requests that an APA application should include the full functional analysis of the transfer-pricing arrangement, in addition to an analysis of the key profit drivers and value added, the choice of methodology, comparable arrangements and copies of inter-company agreements. Upon completion of the review, IR will arrange to meet with the taxpayer – or the international authority in the case of a bilateral APA – to reach an agreed position.
Once a taxpayer has become party to an APA, they must submit annual compliance reports to IR, including financial statements reconciled with the transfer-pricing methodology, and confirmation that the taxpayer is complying with the agreement and that none of the critical assumptions have been breached. This full process usually takes six months for unilateral APAs, or bilateral APAs between New Zealand and Australia. Bilateral APAs take much longer to negotiate with other jurisdictions, and for this reason unilateral APAs are usually favoured by taxpayers, unless there is a risk of double taxation.
The APA programme is long standing. According to IR’s 2021 annual report, 46% of taxpayers that have an agreement have been in this programme for more than ten years, and 22% for more than 15 years. As at 30 June 2021, 76 taxpayers had active agreements with IR, representing tax assured of approximately NZD290 million a year.
IR investigation actively covers a number of cross-border situations, but these do not always lead to litigation. Investigations routinely examine withholding tax obligations in relation to offshore lending, status and liability as the result of the existence of a permanent establishment and the basis on which goods and services provided to a New Zealand entity have been priced by an associate.
For the most part, cross-border tax-related litigation has been prompted by international information requests and has tested the scope and application of the mutual assistance provisions of DTAs. Recent litigation undertaken by the authors has also tested how DTA concessions such as tax-sparing relate to New Zealand’s controlled foreign corporation rules and how income source apportionment rules apply between countries.
Outside these areas, APAs and binding rulings mitigate the need for complex and expensive tax litigation. However, practical barriers to these processes mean taxpayers continue to take positions without assurance.
This issue is not relevant to New Zealand, a non-EU jurisdiction.
This issue is not relevant to New Zealand, a non-EU jurisdiction.
This issue is not relevant to New Zealand, a non-EU jurisdiction.
This issue is not relevant to New Zealand, a non-EU jurisdiction.
New Zealand signed that MLI when it opened for signature in June 2017, and was one of the first countries to ratify it. New Zealand’s approach has been to adopt as many MLI provisions as possible, and it adopted Part VI. That adoption was subject to two reservations relating to MAP cases either already decided by a court or tribunal, or decided after a referral to arbitration but before an arbitration panel renders its decision.
Arbitration clauses exist in New Zealand’s DTAs with Australia and Japan.
The scope of possible arbitration under the New Zealand/Australia DTA extends to issues of fact and any other issues that are agreed between the governments by exchange of notes. In the case of Japan, the scope covers any issue that is unresolved under the MAP, unless a court or tribunal has pronounced upon it. Where the MLI procedures apply, the only limitation is by way of the reservations notified as part of the ratification process, covered at 10.1 Application of Part VI of the Multilateral Instrument (MLI) to Covered Tax Agreements (CTAs).
New Zealand does not have an alternative dispute resolution regime covering tax matters.
New Zealand is not an EU member state. While New Zealand has adopted the MLI with its arbitration provisions, it is too early to determine if there is any change in trend relating to the arbitration of international tax issues beyond the MAP.
There are no published reports of recent international and EU legal instruments being used to settle tax disputes involving New Zealand tax authorities or tax resident parties.
Pillars 1 and 2 were endorsed by NZ along with over 130 countries in October 2021. The NZ government has not, however, decided finally whether to adopt either Pillar and has not ruled out adopting a digital services tax. An issues paper has recently been issued seeking submissions on whether and how NZ ought to adopt the so called “GloBE” tax rules under Pillar 2. Submissions had not closed at the time this chapter was finalised (May 2022).
Despite not having yet been adopted, some high-level observations are possible. Pillar 2 is likely to be of most impact because it will require tax on profits in any country where a qualifying multinational operates to be at least 15%. That might seem low compared with NZ’s corporate tax rate of 28%, but the minimum rate is applied to accounting profit which could include capital gains which are not normally taxed. NZ multinationals which are caught, and subsidiaries of global multinationals operating locally, cannot assume that the headline 28% corporate tax rate will obviate the Pillar 2 rules, which might require further tax to be paid on NZ income.
In much the same way as arbitration between states can compromise the position of local taxpayers, the instruments designed to mitigate controversy in relation to the BEPS Pillars could well supervene on the local tax position of an affected taxpayer. However, the impact may not arise in NZ. If a top-up of tax is required, it may well arise outside NZ in a country where the taxpayer is doing business and less than the minimum tax is paid. All things being equal, tax paid overseas should be creditable in NZ, although it is not clear that tax paid to the NZ government under the Pillar 2 rules would give rise to domestic imputation credits.
The standard provision of the MLI relating to arbitration provides for the arbitral decision to be provided only to the competent authorities engaged in the proceedings. Affected New Zealand taxpayers can expect to receive, from the New Zealand competent authority, at least a redacted copy of the decision that conveys as much as possible of the rationale for the result. A taxpayer dissatisfied with the decision of the competent authority as to what will be released may seek judicial review, but the courts will be reluctant to interfere with IR’s view of its treaty obligations.
The present experience in New Zealand it that international tax issues are or have been resolved using the network of DTAs, combined with domestic law, prior to the adoption of the MLI. That is simply a reflection of the infrequency with which these matters come to the fore and the time that it takes for the necessary procedures to be undertaken. No doubt the DTAs, as affected by the adopted MLI, will play a greater part over time.
Taxpayers wishing to initiate international tax procedures will typically seek professional advice and representation before doing so. Legal input for IR is normally from in-house legal professionals or from the Crown Law Office/Te Tari Ture o te Karauna (CLO).
Apart from professional fees, there are no administrative or filing costs involved in pursuing a tax dispute as outlined in 3. Administrative Litigation.
The administrative and filing costs for the TRA are outlined in its regulations. At the time of writing, the cost of filing an initiating document was NZD410.
The administrative and filing costs for the High Court are outlined in that court’s regulations. At the time of writing, the cost of filing an initiating document was NZD1,350, though only NZD540 for an appeal or judicial review. Filing a statement of claim costs NZD110. Hearing fees (essentially daily Court fees applicable after the first day of hearing) are also charged, and must be met by the taxpayer plaintiff.
The administrative and filing costs for the Court of Appeal are similarly set by regulation. At the time of writing, the cost of filing notice of an appeal was NZD1,100. Daily hearing fees also apply, and are borne by the appellant.
The administrative and filing costs for the Supreme Court are also set by regulation. At the time of writing, the cost of filing for leave to appeal was NZD1,100. Scheduling a hearing date and the first day’s hearing costs NZD1,000, with each additional half day costing NZD500.
Failure to pay fees that are charged by the courts can lead to fixtures being vacated and in extreme cases proceedings being terminated.
Except in proceedings in the TRA, an unsuccessful party must usually pay at least part of the other party’s legal costs. These are usually set by the Court, according to the stages of litigation and bands of complexity.
If a baseless claim is advanced, indemnity costs may apply, but these seldom if ever arise in tax cases where the IR position will be addressed on cogent grounds. The TRA may award costs against a party for bad conduct in the proceedings.
IR does not usually litigate without being confident of its case. In its 2021 reporting year, IR won 83.3% of litigated cases. This success rate has been fairly constant over recent years. It is therefore very uncommon for a taxpayer to be awarded indemnity costs. IR has successfully made indemnity cost claims against some taxpayers.
Save for elements of the tax disputes process (chiefly the facilitated conference stage), there are no tax-related ADR mechanisms in New Zealand. It is possible to mitigate the chance of a dispute arising by seeking an advance ruling or a short-process ruling, but that process can be time-consuming and expensive (see 6.4 Avoiding Disputes by Means of Binding Advance Information and Ruling Requests).
Although IR is very active in auditing taxpayers, not many cases are litigated. According to the legal publisher Wolters Kluwerat, at the time of writing (May 2022), there were only six tax appeals pending: three from the TRA and three from the High Court or the Court of Appeal. Anecdotally, the “pipeline” of civil tax cases is not long. The CLO tax team is not over-burdened and the TRA has so little work at the moment that its future has been debated. This is one of the reasons why the TRA is no longer a sitting District Court Judge, whose services were required in that overburdened Court. There is an important tax avoidance case pending in the Supreme Court dealing with an international corporate refinancing (leave to appeal was given in June 2021), but other cases have not advanced, perhaps because of decisions made by both IR and taxpayers because of COVID-19.
As to criminal cases, it is not possible to identify criminal prosecution numbers until they have been concluded and reported. In its 2021 annual report, IR confirmed that it had completed 50 serious prosecutions to 30 June 2021 and that a further 97 live tax prosecutions were before the courts at that date.
The number of civil tax cases initiated and completed annually is not publicly reported. A brief review of a leading database suggests that in the year to June 2020 there were some 26 tax-related decisions reported from the High Court and more senior courts. Though in the past more cases have dealt with GST than other taxes, that is not the current trend. The spread between tax types is fairly even.
Sums at stake in the higher court matters range from several hundreds of thousands of New Zealand dollars to many millions, however smaller sums were often at issue in administrative matters. High Court criminal appeals as to conviction and/or sentence are more numerous but are not easily collated.
In the prior year, 2019, the Court of Appeal considered ten matters, five of which were procedural applications. The remaining cases dealt with complex technical questions of law. The Supreme Court heard and refused two tax-related applications for leave to appeal.
In the same year, the TRA heard six cases. Four dealt with a technical legal question and two with procedural matters.
Since 2020 there has been a noticeable fall in the number of tax cases coming to hearing. The authors have noted that the level of face-to-face IR audit activity has also slowed somewhat, although IR noted in its 2021 annual report that it had closed in that year 16,140 audit cases, down only 3% on the year before.
There is no publicly available information about criminal cases in the District Court. However, IR has stated that in the year to June 2021 it completed 50 prosecutions for serious tax-related offending, which would have been heard in the District Court.
In the year to June 2021, IR reportedly won 83.3% of the cases it litigated. This success rate has been fairly steady over recent years. It reflects the impact of the disputes process, both in terms of ensuring that only cases that require litigation find their way to the courts, and in the sense that the costs of a dispute often leave a taxpayer struggling to resource litigation even for a worthy case.
The following guidelines are unlikely to be exclusive to New Zealand, and neither will they be exhaustive of the matters to be considered in advising and representing parties engaged in tax controversy.
Know your opponent. Understand IR’s structure and personnel, its administrative practices and requirements. Know where in the organisation to take a matter if intervention is required. Know when to allow IR latitude and when to insist that it abides strictly by its practices.
Need for justification to settle. If IR is to settle a case, it must have justification in law. That requires knowledge of technical tax law but also a clear understanding of administrative law and the scope and limits of IR’s care and management of taxes.
Keep an audit focused. Try to keep an audit as focused as possible as to tax types and periods. Meet deadlines as much as possible and give IR no reason to expand its audit.
Know your client’s weak points. Understand the taxpayer’s strengths and weaknesses that will become apparent during investigation and interview. Manage the process of interview carefully to avoid unwanted concessions and incrimination.
Otherwise, follow the audit strategies summarised in 2.6 Strategic Points for Consideration during Tax Audits.
Invest in the early stages of the tax dispute process. Do not leave it too late to raise arguments and present evidence; entrenched views may later be harder to change.
Build trust and confidence with IR on behalf of the taxpayer client. Without it, everything will be more difficult. Impress on the client the importance of realistic engagement if a matter is to be resolved.
Identify early on who will tell the taxpayer’s “story”. Prepare them by obtaining working briefs of evidence once the issues have become clear. This can be useful both in the disputes process and in preparing litigation. As perceptions of the dispute or case change, check back with potential witnesses and refine what they will say. Check, cross-check and test against documentary evidence what is said by potential witnesses.
Engage forensic accounting and other expert assistance at an early stage. Use it to test both IR’s position and that being asserted by the taxpayer, to be sure that the consequences and implications of both are understood. Make sure that accounting and other advisers understand their job. Agree what assumptions, if any, can be made.
Know your Bench. If the matter is to be litigated, know your Judge. Establish what prior tax knowledge they have. Research their tax “attitudes”. Reflect that in the preparation of evidence and argument. Factor in an element of institutional support for IR’s position.
Strive for simplicity in messaging. Develop a theme and theory for the case, consistent with the facts. Distil complex facts and arguments to summaries that are better understood by a Court, but do not lose the “total picture”.