Insure against the tax man
As a result of this it makes sense that we can expect to see more audit activity, not only from IRD but other agencies such as WINZ and ACC. An audit may be quite random, and you may not necessarily have got it wrong, but unfortunately, it may take some considerable legal and accounting cost to prove that you have taken a reasonable tax position.
One of our clients was subject to an audit which took seven months to complete. The result? An additional $500 in tax. The accounting and legal costs were $5,000.
Another client spent more than $20,000 responding to a query from an IRD office in Wellington. This included flying us and a tax specialist to Wellington to meet with the IRD officer and their supervisor to sort it out. The outcome? No adjustment to the client's income tax account.
Audit Shield is an insurance product which has been available overseas for many years and is now in New Zealand. It will provide cover for the cost of professional fees that are incurred in an audit or review by any Government department.
We believe that this is a great product as it allows a business to purchase the best professional advice and remove a potential confrontation about the cost of that advice. The taxpayer and their advisors can then focus clearly on the audit process.
If you would like a quote or to learn more about Audit Shield, please give us a call. You don't have to be a client of TvA to have this product in your tool box.