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Tax Audits or Enquiries

Inland Revenue has a responsibility to Government and the community to try to ensure that everyone pays the correct amount of tax under the law. This means that from time to time we may need to check the accuracy of information you have given to us.

What is an Audit or Enquiry?

An audit or enquiry involves an examination of your tax affairs to make sure that the information is you have given to Inland Revenue is accurate. An audit or enquiry can take many forms. Sometimes we may need to make an enquiry about a single transaction – other times we may need to audit all your books and records.

An audit or enquiry may involve a phone call or letter asking you to provide further information or verify particular information that you have supplied in your tax return or other tax documents. In other cases it may involve someone visiting you and examining all of your tax documentation for particular years of income or in relation to a particular tax. For example, we may ask to inspect your PAYE records for a particular period or we ask to inspect all your records for all taxes (eg income tax, PAYE, Sales Tax etc).

The enquiry or audit process – what you can expect from Inland Revenue officers

At the commencement of an enquiry or audit officers will:

  • Provide notification of the intention to make enquiries or conduct an audit.
  • (Sometimes we may also carry out unannounced inspections.)
  • provide official Inland Revenue identification when first meeting you
  • Explain the expected nature, scope and duration for the enquiry or audit and indicate the information and records that will be required
  • Tell you about your rights and obligations in relation to the enquiry or audit
  • Give you the opportunity to volunteer information about possible irregularity or omission in relation to your tax affairs. If you do this, the penalties that may otherwise have been imposed may be reduced
  • Allow you to choose someone else to act on your behalf. There are some situations however where you personally must provide information or answers.

During an enquiry or audit, officers will:

  • Explain the purpose of any interview or visit
  • Seek to arrange convenient times and places for any interviews or meetings
  • Ask clear questions
  • Allow you to take notes of any conversations or interviews
  • Give you reasonable time to collect records, documents and papers for examination
  • Answer any reasonable and relevant questions you ask in relation to the enquiry or audit
  • Provide a written receipt for any records that we collect in person at an interview and return the records as soon as possible
  • Make enquiries of third parties with discretion and without any implication of wrong doing by you
  • Allow you to give your views on any relevant issues, including any proposed adjustments
  • Keep you informed of the progress of the enquiry or audit.

At the completion of the enquiry or audit, officers will:

  • Clearly explain the basis of any adjustments made as a result of the enquiry or audit and inform you if any error is detected which has resulted in you paying too much tax
  • Give you the opportunity to explain the circumstances which you believe could justify a reduction of any penalty and/or interest
  • Clearly explain the reasons for, and calculation of, any penalty and/or interest
  • Draw attention to any matters that will help you to understand and meet your taxation obligations in the future

What is expected of you?

If you have been notified of an enquiry or audit, you should prepare for it by reviewing your records and returns.

To meet your obligations under the law you must:

  • Keep records in accordance with the law
  • Provide officers with full and free access to buildings, premises and documents
  • Allow officers to make copies or take extracts of documents
  • Provide reasonable facilities and assistance to officers
  • Provide complete and accurate responses to requests for information

What can you expect from us?

Inland Revenue conducts enquiries and audits in an impartial, fair and professional manner.

The following principles apply to all our work:

If we undertake checks of your tax affairs, it does not mean that we presume you are dishonest in your tax affairs. If the information checked is found to be incorrect, we accept that this may be because you have misunderstood the law or you have made an honest or inadvertent mistake. You may also have failed to take reasonable care or you may have been reckless.

We treat all taxpayers in accordance with the law and we use our powers in a fair, reasonable and professional manner. The officer conducting the enquiry or audit will outline the audit process and,
guide you through the process particularly if you are experiencing an audit for the first time or you are not represented by a professional advisor.

We seek to minimise the cost and inconvenience to you.

How long will it take?

Our aim is to complete the job in the shortest possible time. How long it takes will depend on several factors such as the type of enquiry, the adequacy of your records, the availability of information, the
complexity of the matter and the level of your cooperation.