- 01
The situation
The company received an assessment order covering several years, raising questions on disallowed expenses, withholding treatment on payments to a foreign supplier, and the basis of a claimed deduction. The internal team's instinct was to negotiate. Nobody had reviewed whether the original positions were actually defensible, or which of them were not.
- 02
What we found
Reviewing the filed returns against the underlying records, the positions fell into three groups. Some were correct and simply undocumented, where the treatment was right but the evidence had never been assembled. Some were wrong and worth conceding early rather than defending badly. One turned on a genuine interpretive question where the statutory language supported the company's reading, but the file contained nothing to show the position had been considered at the time.
- 03
What we did
We separated the positions by strength and quantified the exposure on each. For the defensible items we assembled the contemporaneous evidence into a documented file: contracts, invoices, board minutes, correspondence. For the interpretive item we prepared a written technical position setting out the statutory basis and the alternative reading. For the weak items we advised early concession, because credibility spent defending an indefensible position is credibility lost on the ones worth defending. Responses and supporting documentation were prepared for the assessment process.
- 04
What changed
The company entered the process knowing exactly which positions it would defend, which it would concede, and what each was worth, rather than negotiating in the dark. It now documents material tax positions at the time they are taken.
The lesson
Tax disputes are won on the file, not in the meeting. The work that decides the outcome is the documentation created when the transaction happens, years before anyone asks about it.
