Tunnel Vision
Some people believe that the first person to arrive at the negotiation table is entitled to define the nature and scope of the issues to be determined.
This isn’t true.
Typically the person who initially raises the dispute itself will define the issues in a manner which is most favourable to them.
We all know how frustrating it can be to argue with a person who "changes the subject." The frustration stems from the fact that you have selected a scope of argument with which you are comfortable. That comfort level diminishes when the responding party moves to change the framework in which you have been operating.
Redefining the nature and scope of the issue, even if done in a subtle manner, is an incredibly powerful negotiation technique. By redefining the scope of the issue a poor argument can be rejuvenated into a stronger position.
To effectively "change the subject" in a tax based negotiation, the professional must be creative and must thoroughly understand the policies which drive the legislation and the framework which allows the legislation to operate.
Letting it get personal
Once an issue becomes personal it will not be resolved without the intervention of a third party.
In issues of Canadian taxation, in the event of a deadlock between the government and the taxpayer the government’s position will prevail by default. The taxpayer can only win (other than in disputes raised before third parties) if they are successful in persuading the government authority that their position is more correct.
A person who has been offended will very rarely be open to persuasion.
Negotiations must proceed in a dispassionate and professional manner. Respect must always be shown for the other party including where you do not agree with their opinion.
Letting your guard down
Sometimes advisors forget that tax negotiations are adversarial in nature. Government officials take notes of every single discussion (including by telephone) and these notes are maintained in the taxpayer’s file.
I often, when doing access to information requests come across notes of telephone conversations made by government authorities. I see admissions and other comments made by tax advisors that should never have been made. These statements are binding on the client and are extremely damaging.
Compromising your credibility
Once the credibility of a tax professional has been damaged any argument or position advanced from that moment forward will be compromised by this loss.
Credibility can be compromised in any one of a number of ways including:
- disorganization
- weak research
- weak logic
- failure to meet timelines
- making allegations that you cannot back including bluffing your position
- demonstrating a lack of respect for government or for the legal process
- improper dealings with a government official (for example escalating a matter over the head of initial contact)
Credibility losses carry forward to subsequent files and clients.
Inexperience
Some tax professionals only deal with disputes on an occasional basis. Arguments raised and positions advanced reflect this lack of experience.
Practise, training and experience are critical to success in this field.
Proceeding without the proper arsenal of tools
Often the best defence to an assessment has absolutely nothing to do with tax.
For example, principles from a field of law other than tax can often provide the best defence in a tax matter. It is not uncommon for defences to tax matters to be founded in the field of administrative law, corporate law, labour law, trust law or constitutional law.
Judges are particularly comfortable with defences drawn from other areas of law given that they have a high level of familiarity and expertise with areas of law other than tax.
Failing to explore the possibility of a win-win scenario
Sometimes tax professionals think that the best way to achieve results for their client is to try to "steamroll" the government official.
Typical steamrolling behaviour includes blindly advancing a single argument without re-evaluation or refinement during the process, not taking the time to listen to the government official, failure to consider the constraints within which the government officials operate and not considering the outcomes which are optimal to them.
To resolve disputes efforts should be made to identify the middle ground. Then you can more effectively explore options to bridge the gap on issues where you do not agree.
On issues where you cannot agree actively seek out opportunities to allow each party to achieve a partial victory if at all possible.
Looking for an easy way out
It takes time to properly research an issue and then present a logical, persuasive written argument. But a well reasoned and researched argument is critical to the appeal process. It becomes the permanent cornerstone of the written record.
Some advisors believe that they can take shortcuts in this process. One of the most common shortcuts is favouring the oral advancement of arguments over written advancement of arguments.
This is a dangerous practice for a number of reasons: miscommunications are far more likely to occur in a discussion than in a written document. An oral record of a discussion is incapable of being passed along to a third party without distortion. Further, reducing arguments to writing is essential to allowing fine tuning of those arguments, including full identification of weaknesses. 
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