IRD Random Audits – are you prepared?
24 Jul 2017
You may have noticed that Inland Revenue has been featuring in the media quite a bit lately. In recent budgets the Inland Revenue has received additional funding. This has resulted in a sharp increase in audit activity and now, more than ever before, individuals and businesses are at risk of being selected for a random audit, enquiry, investigation or review.
It would seem that their initial attention has been focused on the hospitality industry and we understand the Inland Revenue will be targeting the construction industry next. The main purpose of these audits is to ensure that all income is being declared and that expenses are being claimed correctly.
If your business or individual return is subject to a random audit, enquiry, investigation or review, there will be additional accounting charges involved for us to liaise with the Inland Revenue, research their questions and provide responses etc. In some cases, when there are complex environments, unusual circumstances, multiple years or multiple companies and trusts, these costs could add up quickly.
In order to mitigate these costs, we will contact you shortly to offer you the option of an Audit Shield Master insurance policy. Within the offer, we will outline the premiums for the insurance cover. This insurance is underwritten by Vero Liability Insurance Limited and is fully tax deductible for businesses and self-employed people. It can provide you with peace of mind in relation to the associated accounting costs.
The features of this insurance are that it covers:
- Our accounting fees to respond to audits, enquiries, investigations and reviews of your lodged returns, including those from previous years.
- Specialists’ professional fees if we need to engage a lawyer or expert for an opinion.
It is important to reiterate that this is not about the quality of compliance work that we provide to you and your business. It’s simply an optional insurance that can protect you against any unforeseen costs associated with an Inland Revenue audit, enquiry or review.
In order to be covered under this insurance, you need to have taken out the Audit Shield Master Policy and paid the premium prior to any notification from the Inland Revenue of their intention to audit you or your business.
Further details and the terms and conditions will be sent out later this month, however in the interim please feel free to contact us if you have any queries about this type of insurance.
IRD Random Audits - are you prepared?