Large business and tax compliance publication

Formal approaches

Generally, when we decide that using formal powers is necessary, we will advise you that we intend to use them and the reasons for doing so.

We will use formal information gathering powers when the informal process is no longer productive or if your circumstances, history or behaviour indicate that a formal approach is warranted.

There are some situations where we may adopt a formal approach in the first instance. This includes where there:

is a history of uncooperative behaviour
are privacy, contractual, or confidentiality obligations - for example, former employees or third parties.

In other cases it may be necessary during the course of an audit or a review to move from an informal to a formal approach. This can occur where:

full cooperation is lacking
there are ongoing or persistent delays in providing information
it is necessary to obtain an exact picture of an arrangement or transaction.

Examples of when we would use formal powers include where:

the information provided informally only partially answers our requests
a response has qualifying statements attached to it or are redacted
access to senior personnel involved in the issues is restricted, for example, in cases where intention is an issue
representatives request that everything be put in writing and take a legalistic approach to responding
documents, people and other evidence are purposely placed outside our jurisdiction
claims of legal professional privilege or the accountants' concession and corporate board documents on tax compliance risk are made without providing sufficient information to enable us to properly assess the veracity of their claims.

Scope and relevance of our requirements are matters for us to determine. For example:

If a document contains any information relevant to the issues under examination then the document in its entirety is a relevant document.
If there is an issue as to whether a document is relevant then the document should be made available for examination by us to determine its relevance.
Assertions that a document has information that is 'commercial-in-confidence', contains trade secrets or proprietary interests are not acceptable as a basis for redaction or non-disclosure.
Where there are sensitivities around information sought, you should speak with the compliance team as soon as possible to resolve any concerns.
If a response containing factual information to an information request is made subject to some form of qualification, condition or caveat, such as 'without prejudice', then this may be considered to be a partial response to our requests and a formal notice may issue.
While we respect your right to assert that legal professional privilege, accountants' concession or that documents are corporate board documents on tax compliance risk may apply in whole or in part to a document we still need you to provide sufficient information for us to determine if the tests for these rights or concessions properly apply.
If a document is withheld, or redacted in whole or in part, without appropriate justification, including not providing sufficient information to determine whether the test for legal professional privilege or other concessions properly apply, then this will constitute a partial response to our information requests and a formal notice may issue. The attempt to redact part of a document on the basis of the accountants' concession or corporate board documents on tax compliance risk would be rejected on the basis of the sole purpose test.

Mutual expectations during formal approaches

You can expect that we will:

treat you fairly and, as far as possible, in a non-intrusive way
give you reasonable notice of our intention to use our formal powers in all but exceptional circumstances
explain why we are requesting information
clearly identify the objects of any examination
keep information requests relevant and focused
consider requests for an extension of time to comply with a notice
keep records of your personal information safe and secure
respect your right and discuss with you the basis of any claims for legal professional privilege, the accountants' concession or that documents are corporate board documents on tax compliance risk. This will not adversely impact our view of your cooperation.

We expect that you will:

provide a full response in a timely manner to all enquiries
notify us if you have difficulty complying by the due date
be prepared for any formal interview.

For more information, refer to the:

Access and information gathering manual

Taxpayers' charter - fair use of our access and information gathering powers

PS LA 2004/14 Access to 'corporate board documents on tax compliance risk'.

Sections within Active compliance approaches

Last Modified: Wednesday, 27 February 2013