When the IRD accuse you of wrongdoing, audit insurance should be in your tool box. We can not prevent your selection for IRD audit, we can however ease the pain of the cost as we have discovered a new product called 'Audit Shield'. This product is an insurance product that will help cover the cost of fees incurred during the audit process.
As we all know our tax system is based on self assessment. Many of us like to abide by the rules, others of us like to push the envelope. The thing about self assessment is that it is open to interpretation. While we would all like to think that our interpretation is the correct one there are times when the Commissioner of the IRD would like to dispute this.
Most of us do not intentionally go about trying to deceive the IRD to reduce our tax bills. We will however take advantage of interpretations to get the best outcome for ourselves.
During the budget rounds the government has allocated additional
funds to enable the Commissioner to police the interpretation and application of the tax law more fully.
Part of this process is data matching with the IRD now able to data match between departments and between government services.
Unfortunately, if you happen to get selected for an audit or review it is not necessarily that you have got it wrong. In a lot of cases the tax payer has proven they are not at fault and have a very reasonable tax position. However, along the way to prove your position there can be a significant cost.
It is hard to reconcile the expense against the outcome. The other thing to be aware of is that it is not just your actions that could spark the audit. IRD may choose to audit you for any one of the following reasons:
- to analyse your business accounts or tax returns
- to check someone else's records (such as your employer or a bank that pays you interest) and match them to your records
- information received in another audit which suggests your records should be checked
- your compliance record (whether you have kept to the tax laws in the past)
- your payment record (whether you have paid your taxes on time in the past)
- selecting a particular industry
- examining a particular issue or problem that affects a group of taxpayers
- where you live, or run your business (if auditing a particular area)
- local knowledge, perhaps arising from media reports or unexplained wealth
- information received from other people about you
- you may be chosen randomly.
We can not prevent your selection for audit, we can however ease the pain of the cost as we have discovered a product called 'Audit Shield'. This product is an insurance product that will help cover the cost of fees incurred during the audit process. We believe this is a great product as it removes the stress and likely confrontations around fees enabling both the tax payer and their professional representatives to focus clearly on the audit without possible cost restraints.
Because we think this is such a great product, we will be forwarding more information on Audit Shield to our clients over the coming month.