Under the IRD Microscope: How to Survive a Tax Audit in New Zealand

When the Inland Revenue Department (IRD) comes knocking, even the most diligent business owners can feel a surge of panic. An audit or investigation by the IRD isn’t necessarily a sign you’ve done something wrong but how you respond can make a huge difference in the outcome.

At IR Legal, we work with businesses across New Zealand to prepare for, navigate, and respond to IRD audits and investigations. With the right legal guidance, you can protect your business, your finances, and your peace of mind.

Why the IRD Might Audit You

IRD audits aren’t random. In most cases, they are triggered by specific red flags or data discrepancies. Some common reasons include:

• Unusually high or low income or expenses
• Frequent or large GST refunds
• Mismatches between PAYE, GST, and income tax returns
• Industry benchmarking anomalies
• Complaints or anonymous tips
• Cash-based businesses (e.g. hospitality, retail)

Once you’re on IRD’s radar, their investigation can be detailed and time-consuming, looking back several years and examining financial records, bank statements, payroll records, and more.

What to Expect During an Audit

IRD audits can take several forms from simple desk reviews to full-scale, in-depth investigations. You may receive a letter requesting specific information, or in more serious cases, IRD officers may visit your premises.

Their objective? To ensure your tax returns are accurate and that you’re complying with New Zealand’s tax laws. But during this process, even innocent mistakes can be misinterpreted especially if you’re not properly represented.

Common Pitfalls Businesses Face

Many businesses make costly mistakes simply by not understanding their rights or obligations during an audit. Common missteps include:

• Voluntarily providing too much or poorly explained information
• Attempting to handle the audit alone without legal or accounting support
• Inconsistent record-keeping or missing documentation
• Making off-the-cuff statements that are later used against them

At IR Legal, we act as your buffer managing communication with the IRD, explaining your position clearly and legally, and ensuring you’re treated fairly throughout the process.

Your Rights During an IRD Investigation

You have legal rights during an IRD audit, including:

• The right to legal representation
• The right to understand what is being investigated
• The right to request time to respond
• The right to dispute findings and appeal decisions

Never assume that IRD’s conclusions are final. If you believe the IRD has misunderstood or miscalculated, we can help you challenge the findings and negotiate resolutions, including tax relief or payment arrangements if needed.

Need Help with an IRD Audit or Investigation?

Don’t wait until it’s too late. IRD audits can result in penalties, interest, and even prosecution in serious cases. If you’ve received a notice or even suspect you might speak with IR Legal immediately.

We have extensive experience protecting clients during IRD investigations, minimizing liabilities, and resolving tax disputes efficiently.

Contact IR Legal today at www.irlegal.lawyer to book a confidential consultation and take control of your tax situation before the IRD takes control of you.