Appeal Stage #1: Appeal during the audit
There are a number of strategic benefits associated with involving your lawyer in a tax disagreement (or potential disagreement) before the assessment has been issued. Many tax disputes can be resolved without the assessment ever being issued. For this reason, ideally, involvement should occur at the first sign of problems during an audit.

I offer two different streams of service in connection with audits: a behind the scenes "ghost" function or a "front and centre" role. I can assist you in determining which of the two approaches might be better for your situation.

Appeal Stage #2: Appeal after the audit has been issued
For the majority of tax issues there are two levels of appeal once an assessment has been issued. The first level of appeal is to the appeals branch of the same government entity which issued the original assessment. The vast majority of appeals are resolved at this stage. Representations may be made in writing. There is also opportunity to arrange for discussions with the government decision maker.

Appeals which cannot be resolved at this stage may then be appealed to a court. Federal tax matters are appealed to the Tax Court of Canada. Provincial tax matters are appealed to the respective provincial courts (in most provinces referred to as the "Superior Court" or the "Court of Queen's Bench"). Customs matters are appealed to the Canadian International Trade Tribunal.

Notice of Objection
There are two major objectives to be achieved at the Notice of Objection stage:

1. win the appeal by persuading the appeals branch that the decision made on audit was incorrect; and

2. build the case for appeal to the courts. In the event that you are not successful before the appeal branch it is critical to build the case for proceeding before the courts. Ironically, presenting your appeal in a manner designed to build the case for court will often assist in resolving the case at the first level of appeal. The appeals branch will be forming opinions as to the veracity of your appeal, your credibility and as to the likelihood that you will continue the appeal. This is a good time to let the appeals branch know that you are both credible and serious in your approach.

Unfortunately, opportunities at the Notice of Objection stage are often squandered. Some of the more common mistakes which I have seen are:

1. allowing the other side to define the scope of the issue;
2. insufficient knowledge of your material (facts and law);
3. failing to develop a fall back/alternative position;
4. lack of awareness of opportunities to resolve the issue by alternative measures including procedural defences;
5. failure to listen to and respect the position advanced by the other side;
6. failure to carefully read the legislation;
7. failure to develop a strategic game plan;
8. failure to recognize the profound impact of loss of credibility; and
9. allowing personality issues to cloud good judgment.

Common mistakes made in Challenging tax assessments

I can assist you in devising and implementing a strategy which will enhance your chances of winning at the first level of appeal. The key to winning at the first level of appeal is the adoption of, and adherence to a solid strategic plan. Research and experience are critical to the development of the strategic plan.

I will also assist you in answering the more subtle questions which are commonly asked at this stage which include the following:

• Is it preferable to appeal by the "fairness" route instead of the ordinary appeal route?
• Should the matter be taken to the ombudsman?
• Should the matter be politicized?
• Can the assessment be reversed on a correction?
• When should you escalate the matter within the government?
• How do you define the scope of the issues?
• How do you deal with an unreceptive government official?
• When is it a good idea to meet with the government official?
• Who should attend that meeting?
• Can we "saw off" the amount owing?
• Do we present all of our arguments in the first instance? Do we show our hand?
• How do you deal with unfavourable facts - are they fatal?
• How do we advance alternative arguments?

Appeal Stage #3: Appeal to the courts after the assessment has been confirmed
Appeals which are not successful at the Notice of Objection stage may be appealed to the appropriate court (or in the case of customs matters, to the CITT). The appeal will ultimately be heard by a single judge who will render a written decision after reviewing the arguments and facts presented both in writing and orally by both sides. Most sales tax and customs cases are resolved in a one day hearing.

A number of procedural steps are required to be fulfilled prior to the date of the hearing. The parties to the dispute will each file written pleadings (appellants case and respondants case). Witnesses and documents will in most cases be subject to the discovery process prior to the hearing. Parties to the litigation are expected to make all reasonable efforts to settle the case without the requirement of a court hearing.

Negotiations at this stage are strictly between lawyers. The provincial government bodies are represented by government lawyers and federal bodies (including the Canada Revenue Agency) are represented by lawyers from the Department of Justice.

Government lawyers will take a fresh look at the issues in dispute and will consider the arguments being advanced with an open mind. Where the government's case is not strong the lawyers will recommend that the appeal be settled out of court.

I am available to take your matter to any of the Tax Court of Canada, the Ontario Superior Court of Justice or to the Canadian International Trade Tribunal.