IRD reviews/audits

For many, receiving a letter from the Inland Revenue (IRD) advising that they have decided to undertake a risk view in relation to a certain transaction or tax position taken, can certainly make the heart skip a few beats, even when the correspondence was somewhat expected – perhaps due to a large GST refund claim having been made. 

IRD reviews and audits can become very time consuming and expensive, particularly in cases where the person under review perhaps cannot provide all the information requested, or responds to a certain question in a way which creates confusion or suspicion in the mind of the IRD officer – remember the old saying, first impressions count. 

Often the initial communication from IRD will request large amounts of information from the person, and commonly we see it’s like a large fishing net being thrown out – start wide, catch as much as you can up front, and then narrow the focus on the bigger fish, once the contents of your net have been examined. 

In our experience, the initial ‘net’ is a template letter – almost identical in its drafting across a raft of different taxpayers, requesting the standard types of documents you would expect the person to have in their possession, depending on the nature of the review – a GST refund claim on a land purchase for example – a copy of the sales and purchase agreement, legal settlement statement, evidence of payment being made etc. 

How you prepare your initial response to an IRD information request, will often dictate how the review will progress. Say the wrong thing or not explain a certain transaction clearly enough, and you could find yourself in for the long haul, as once the IRD officer has formed a certain mind set, it can be quite challenging to realign their way of thinking, to be on the same path as yours. 

We are here to assist in mitigating the risk of the review going off the rails in its early days, endeavouring to instead have the reviewer satisfied to the extent necessary to close case, with minimal cost exposures, expressed both in time and money, for our clients. 

We have an experienced team, who certainly have an appreciation of how to navigate with the IRD and plot the best course through the process, seeking the best possible outcome for our client. Certainty the questions asked by IRD, excuse the pun, can be quite taxing, and when drafting our response, we have the technical expertise to ensure that the risk of misinterpretation or confusion on the part of the IRD officer, which will only lead to further questions, is materially reduced.    

Sometimes however, there will simply be a difference of opinion, a stalemate position where neither party in the review (often now having progressed to an audit) is prepared to concede. At this point, the case will move to the formal disputes process – more formal documents and timeframes required to be adhered to. We are also well versed in assisting our clients find a pathway through these trees of uncertainty, preparing the necessary dispute documents and attending conferences with the IRD team, in an attempt to resolve the remaining differences in opinion. 

Ultimately however, it’s a question of economics, and while the emotional pockets of the client may be very deep, the financial ones will not be so, and certainly not to the extent of the IRD (it’s not their money they are spending after all). Consequently the focus needs to move to reaching an appropriate settlement, even if it means agreeing not to agree, and we will be able to guide you through this sometimes emotionally draining process, with the view to obtaining the best possible outcome we can for you in the circumstances.  

So if you need help, please reach out. Our level of our involvement can range from basic strategy advice of what to do next or how to respond appropriately, through to managing the entire process for you.  

  • This field is for validation purposes and should be left unchanged.

Lily Li

Senior Tax Consultant.
Read Lily’s profile.

As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. xero logo It’s small business accounting software that’s simple, smart and occasionally magical. Log in online anytime, anywhere on your Mac, PC, tablet or phone to get a real-time view of your cash flow. 
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. tax traders logo Tax Traders allows you to buy someone else’s tax to settle your account with Inland Revenue, as well as save on interest and late payment penalty charges.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. smart ar logo Astute cash flow management is essential for operating a small business.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. myob logo Trusted by 1.2 million businesses, myob is New Zealand’s largest accounting solutions provider. The platform is equipped to support the needs of New Zealand organisations.
As a client at Gilligan Sheppard you will access to international networks and resources to enable optimal outcomes for your business/trust/transaction.  accountancy insurance logo Tax Audit Insurance specifically designed for accountants in public practice. This provides cost effective protection and peace of mind against the substantial cost that may be incurred should IR or other government authorities conduct a random review, investigation or audit.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. cpa logo A CPA is a finance, accounting and business professional with a specific qualification. It indicates a soundness in depth, breadth and quality of accountancy knowledge and gives you competitive advantage over your peers.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. agn international logo AGN International is a worldwide asociation, composed of four regions, of independent accounting and advisory businesses.
2022 Marketing To-do List
It’s on everyone’s lips, “Let’s hope that 2022 is better”. Lockdowns and levels (and now lights) brought obvious change to business, and the New Year often brings a fresh perspective on [...]
Perspective is power
One person will see the Willow tree as protection from the sun, another, will see the shade it provides as cold and unwelcoming. Another will see the Willow tree as an obstacle in their way, yet one [...]
Some life changing finds
Every year I stumble across a whole lot of cool new things – books, apps, music, websites. They make life a little easier and/or a little more interesting. Sometimes I find things that are [...]
The journey from caring to intolerance
You might ask, “Wtf, what has triggered Bruce to rant about this topic?” It’s simple really, a minor event that no one should have even had a second thought about, as the action and reactions [...]
One-sentence-story
A tale of change and adaption. In March 2020 the world changed. Many thought it would revert quickly to life as it was before and that our behaviours would also revert to what we were used to and [...]
Interest deduction limitation rules: update
In our June newsletter I wrote an article that ‘attempted’ to explain the Government’s proposed new interest deduction limitation rules, which were to have an effective commencement date of [...]
Working from home reimbursements
Covid has changed the landscape of our world. Our everyday living situations, from how we interact with other people, to how we run our businesses has changed in an all-encompassing way. I could [...]
Travel is my sanity
After five weeks of level-four lockdown, followed by seven weeks of level-three, I was asked to write an article for our newsletter. To be honest, I couldn’t summon enough positive energy to write [...]
Richard’s September-October 2021 tax updates
Richard has had over 30 years’ experience with New Zealand and International taxation. His team provide services including: Q&A service for accountants Tax opinions IRD risk reviews and audits [...]
Grow your business in lockdown. Part four of four.
Webcam selling confidence Our marketing team have collaborated with Ambrose from the Sales Mastery Company to create webinars to help small to medium businesses survive lockdown. View the fourth [...]

Click here for details.

We are recognised as authorities in our specialised fields. We publish newsletters with informed opinions that are free for you to subscribe to.

Click here for details.

We are recognised as authorities in our specialised fields. We publish newsletters with informed opinions that are free for you to subscribe to.