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Dispute Resolution Panel – useful avenue for resolving disagreements
TTCS Virtual Sharing Session on Indirect Tax

13 May 2024

THE Dispute Resolution Panel (DRP) was introduced on July 1, 2013, to give taxpayers an opportunity to resolve an appeal or application for relief and avoid proceedings on such matters to the Special Commissioners of Income Tax.

The aim is to help taxpayers and the Inland Revenue Board (IRB) reach an out-of-court settlement, thus saving time and cost for both parties. The taxpayer can only access the DRP once an assessment has been issued and a Form Q (an appeal form) has been filed.

The DRP avenue can be found in many Commonwealth member countries. It consists of senior officials from the IRB who are entirely independent and not involved in the particular case under appeal. The DRP does not have anyone from outside the IRB.

Despite the absence of independent third parties from the DRP, it is still a useful forum for taxpayers to present and clarify their reasons for the appeal and a further opportunity to produce additional evidence to support their position to an independent team within the IRB.

What is taxpayers’ perception?

Sometimes, taxpayers have the perception that since there are no independent outsiders in the DRP, it is seen as another opportunity for the IRB to review its own position as to whether it has a case to pursue against the taxpayer. If it has a good case, the perception is that the DRP is likely to provide a decision in favour of the IRB. Is this true?

This perception may be unwarranted. Generally, the DRP tries very hard to listen to the taxpayer’s side of the case and attempts to mediate between the taxpayer and the team within the IRB dealing with the case. Effectively, they act more as facilitators and mediators between the two parties. They look at the case presented by the parties very thoroughly and spend significant time in attempting to bring the parties together.

How to prepare your approach to the DRP?

The taxpayer must prepare his case beyond what has been presented to the tax officers handling the case. He must take this matter seriously and prepare the case in a manner similar to what he would have done if he had gone to the courts. The level of evidence, the substantiation of case laws, documents to support the facts, and consolidating all this within the framework of the law, should be comprehensive and presented to the DRP from an honest standpoint.

The mode of presentation is equally important. Confrontational engagement would be unproductive. Usually, good results are achieved through reconciliation and compromise, and the experience is that the DRP will assist taxpayers achieve this goal where possible.

How can the DRP be improved?

The most important step to improve the credibility of the perception of the DRP would be to introduce an entirely independent member into the panel. The independent person should not be a staff of the IRB or a staff from the government sector.

The intention here is to eradicate the perception that the DRP is biased towards the IRB’s position and is just another internal mechanism to help the board vet the assessments. In reality, this is not the case, but perceptions will remain without independent members from outside the IRB fraternity.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).

This article was originally published on the Sun daily.

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