Tax reviews & audits are a vital tools the Inland Revenue uses to protect the integrity of the tax system. However, no business owner looks forward to receiving a letter from the IRD notifying them of a review or an audit.
An audit is an examination of your financial affairs to check that you’ve paid the correct amount of tax, and that you are complying with the relevant tax laws.
It is human nature to panic if you have received an audit letter from the IRD, however the best thing to do is to “Prepare”.
We can help you compile the relevant information as requested by the IRD, we can also go through your accounts to make sure everything is in order before submitting this to the case officer. Don’t worry if you don’t think you have enough time, we can ask for an extension of time if needed.
IRD Risk Review
What is a risk review?
A risk review is a preliminary review of your tax records. IRD normally does a risk review for a part period, for example reviewing income tax returns for one financial year or a few GST returns to determine if there has been any mistakes made.
It is similar to an audit in terms of information requested. The case officer will still require supporting documents for tax returns filed. Documents such as financials, invoices, receipts and log books may be requested.
What to do so that a risk review does not turn into an audit?
A risk review itself does not constitute notice of a pending tax audit. If properly done and no serious errors are found, the risk review can be successfully completed without need for an audit or further review.
However if the case officer finds that there is a high risk that the returns are incorrect, the review will lead to a tax audit under section 141G(1) of the Tax Administration Act 1994.
We can assist clients in any state of review or audit. However, for the best outcome we recommend that you contact us when you get the first review letter. We work with our clients to compile information required by the Inland Revenue. Using our expertise, we match source documents with your returns and identify any problems beforehand.
What if there are mistakes in my returns?
We understand that with the busy lives small business owners lead, there may be some mistakes in the returns. Depending on the impact of these mistakes, there are options available to you to rectify these.
For minor mistakes, we can discuss with you and if required liaise with the IRD case officer for the best course of action. For more serious mistakes there are options such as voluntary disclosure, notice of proposed adjustments or re-doing your returns.
Each review/audit is different, its best to discuss with us out your accounts for specific advise on how we can handle your review or audit.