IR audits aren’t scary – Or so they say in this video

https://www.ird.govt.nz/help/demo/business-audits/audit-video-index.html

IR have released a new video “All About IR Audits”.

Although the video portrays a positive, almost pleasant experience, if you receive a risk review or audit letter, we suggest you get to know what to expect in reality and how to make the process easier for you and your business.      Please read our article after watching the video!

Please, please DO NOT have conversations or correspond with IR by yourselves in an audit situation.

Here’s a few tips from an accountant’s point of view (remember we’re in your corner to support you).

1. Tax risk review – it is indeed a pre-audit check to see if a fuller audit is required. If the communication with IR during the tax risk review is handled properly you save yourself the inconvenience of a full audit.
2. However much IR tries to make things pleasant for you, the activity will always be anything but. There are some things that the IR cannot do, such as go ‘fishing’ for things based on suspicion in case they are true. This is one of the reasons why you should always have professional representation during IR compliance activity.
3. Certain audits have taken years to complete. In recent times the IR has streamlined their processes and have improved the accountability of their audit staff. However, you need to put everything else aside and focus on getting the review successfully completed as quickly as possible. An experienced advisor knows the importance of the time factor and will know what to say and how to say it. Use us – we are experienced in dealing with IR!
4. IR is conscious of the cost-benefit of its auditing function; it has to report to the Government on the $ earned, as against the costs it incurred (in addition the non-monetary benefits such as public education). Through a tax risk review, the IRD should have eliminated all unproductive / uneconomic cases. If an audit is started then the IRD needs to justify the resources used for the audit. The monetary benefit from an audit to the Government is the tax shortfall assessed post review plus penalties and interest. An audit closed without a benefit leaves questions as to why they were commenced in the first place. So, don’t be too hung up on that refund- the IRD is there to find the tax shortfall!

We strongly recommend the following:

Involve Love to Grow’s specialist tax adviser, Ramanie de Zoysa early on in any audit interaction. Ramanie used to do this stuff for IR for 19 years (before she left the dark side! ;-)) Having an experienced tax advisor attend the meeting with you can be very beneficial. In reality the potential for disruption to your business could be considerable, if an audit is not carefully managed with expert assistance.

From experience, we cannot express the importance of having Love to Grow review all responses before providing these to Inland Revenue. If any errors have inadvertently occurred, we can voluntarily disclose these to the investigator, which can reduce penalties.

Love to Grow can assist in providing reports of internal tax reviews, which could help expedite the process – saving you time and money.

Have a chat with Ramanie, she has an in-depth knowledge of legitimate solutions and allowances within the tax system, which you may not be aware of. While the video is informative, please don’t be complacent. Audits can easily turn into long, drawn-out and stressful affairs, if not handled correctly from the outset. Invest in managing your business financial affairs professionally, well in advance of any audit, so you can rest easy if an IR person in zippered hi-vis should come calling.

Contact us at: info@lovetogrow.co.nz or tel: 04 972 4182, 09-282 3054 or 03-666 0124