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Services
Risk Review
If the ATO is interested in you and your business, it is likely to begin with a Risk Review.
The risk review considers what issues should proceed to audit. This is your opportunity to persuade the ATO there is no need for audit or at least to limit the audit issues.
The review is also an opportunity to make voluntary disclosures attracting the concessional penalty rate.
The risk review considers what issues should proceed to audit. This is your opportunity to persuade the ATO there is no need for audit or at least to limit the audit issues.
The review is also an opportunity to make voluntary disclosures attracting the concessional penalty rate.
Given some issues are likely to be further investigated, the review is an opportunity to prepare yourself for the audit, to be one step ahead at that even more demanding stage which is likely to be costly, drawn out and distracting.
The review needs to be carefully managed if you are to make the most of its opportunities and have any hope of containing the audit, in which the ATO’s focus will be on quantifying upward adjustments of liability.
Audit
Audit is the ATO’s painstaking process of deeper probing of issues selected in the risk review, in which quantifying the upward adjustments of liability that are likely at the end.
If you have used the risk review process as an opportunity to prepare for audit, you should already have assembled most of the important documents, spoken to people with knowledge of the facts and worked out your position.
But you should expect further questioning by the ATO, requests for more information and documents and spending further time, resources and money.
It is not uncommon for an ATO audit to look back over many years to long ago concluded transactions with the aim of making debit adjustments.
The conclusion of the risk review and commencement of the audit should be the occasion for you to revisit the strategy [case management plan] you put in place for the review, plot the steps and timetable for the work to be done and work out the resources needed.
It is not uncommon for tax audits to stray needlessly into other areas. A well thought out audit plan can help focus on the real issues.
And bear in mind you will not only be dealing with the audit but also preparing yourself for potential litigation. Of course, you hope to avoid that, but preparing for litigation is not a different process from dealing with the audit. Done properly, your audit work prepares you for objection and appeal without inevitably leading you there.
Disputes
Most people associate dispute with tax litigation. But you should keep the objection and litigation processes in mind and prepare for them from the earliest moment the ATO signals its intention to probe your business. It should inform your planning and work in the risk review and audit. Approaching things any other way risks being less prepared than the ATO for the dispute.
For this stage you will need to carefully consider your position and draft the objection, with the help of lawyers. You will need to be ready to back up your objection with documents and submissions.
The objection officer will not have been involved in the audit but will be informed by those who were. The objection is a final opportunity to persuade the ATO of your position before litigation. So it is worth spending further substantial resources on it.
But if the objection is disallowed you will need to quickly consider and get advice about your prospects of success, choice of venue [Federal Court or AAT], choice of counsel, the rest of your team and the case management plan.
If you have reached the litigation stage you will need lawyers including tax counsel. You should get a solicitor’s help with preparing and filing the court and tribunal documents, assembling the brief including drafting the memorandum of instructions, assembling the important documents and to begin thinking about witnesses such as experts.
Tax Managers
There is nothing wrong with running a tax dispute in house or dealing with the ATO risk review or audit yourself rather than calling a lawyer.
But you should not be surprised to have weekly telephone conversations with tax officers.
And expect to receive letters from the ATO about areas of concern ending with a long list of documents and information they expect you to provide by a deadline, employees and advisers they want to talk to.
It can quickly become time consuming and a distraction from what you want to do. You may find yourself explaining up the line why so much time and so many resources are being spent on responding to the ATO.
I can help you avoid that happening.
If you start early with a plan [sometimes called a case management plan] you can map out a timetable of steps for dealing with the ATO, what resources you will need and for how long, what it is likely to cost and document record the issues at stake for the company. Planning will help you keep control of the process and explain to Board what is going on.
I can help in other ways, by making sense of ATO information requests, by sifting and assembling documents, taking statements from people of interest to the ATO [perhaps people who have moved on], drafting correspondence and providing guidance along the way.
Counsel
These days tax counsel is often briefed directly, by companies and accountants, without a solicitor and perhaps without the benefit of junior counsel. Barristers exist to provide independent advice. They key to getting the most out of them is providing them with a comprehensive brief of the facts, the issues and supporting documents.
The brief may not be all it should be. It may not adequately explain the background and introduce the client's issues. It may be missing important documents. So valuable time has to be spent putting the brief into shape.
If you are faced with that, consider discussing with the client bringing me in to get better instructions, finish off the memorandum, make sure the important documents are there and statements are taken from the right people so that you have the best possible introduction to the matter before that first crucial conference.
Accountants
The service you provide sometimes involves running your client's risk review, audit or tax dispute. You may be the client's 'face' in dealings with the ATO. It is not always necessary to involve lawyers and any way your client may expect you to handle the investigation. But you should consider whether it is in your client's best interests to involve a legal adviser.
Of course litigation is the exclusive preserve of lawyers, for good reason, and you should certainly involve a solicitor if the dispute has got to that point.
But long before then, in the risk review and audit, you should seriously consider everything you do has to be with the potential for litigation in mind and that it would be in your and your client's interests to get help with planning the steps in the process.
That help would include understanding ATO information requests, mapping out the steps in the process, anticipating the resources you will need and generally having a strategy in place so that the client can be satisfied at Ω
Contact Information
Address
766 Brunswick Street North
North Fitzroy 3068 VIC