How to Prepare for an IRD Audit

Receiving a notification of an Inland Revenue Department (IRD) audit can be daunting, but with the right preparation, you can navigate the process with confidence. Here are some key steps to help you prepare and ensure compliance:

1. Understand the Scope of the Audit

The first step is to carefully review the audit notice from IRD. Identify what areas the audit will cover, such as income tax, GST, PAYE, or other specific concerns. Understanding the scope will allow you to gather the necessary documentation and focus your preparation efforts.

2. Organise Your Financial Records

Accurate and organised records are essential during an IRD audit. Ensure you have:

• Invoices and receipts for income and expenses

• Bank statements and reconciliations

• GST returns and supporting documents

• PAYE records, including employee timesheets and pay slips

• Asset purchase records and depreciation schedules

Having these documents ready demonstrates your commitment to compliance and transparency.

3. Review Your Tax Filings

Before the audit begins, review your recent tax returns to ensure they are accurate and complete. Check for:

• Errors in calculations or omissions

• Inconsistencies between reported income and bank deposits

• Proper categorization of expenses

• Correct application of GST or PAYE rules

Address any discrepancies proactively and be prepared to explain any anomalies.

4. Seek Professional Advice

If you are unsure about any aspect of your tax compliance, engage a tax professional. They can:

• Review your records and identify potential risks

• Advise you on how to address any issues

• Represent you during the audit process and communicate with IRD on your behalf

5. Maintain Open Communication with IRD

Respond promptly to any requests for information and be transparent in your dealings with IRD. Honesty and cooperation can help build goodwill and reduce the likelihood of penalties.

6. Learn from the Process

An IRD audit is an opportunity to identify areas for improvement in your record-keeping and compliance practices. Use the experience to strengthen your internal systems and avoid future issues.

Conclusion

Preparation is key to a smooth IRD audit experience. By organising your records, reviewing your filings, and seeking professional guidance, you can address any concerns and demonstrate your commitment to compliance. Remember, proactive preparation can make all the difference in successfully navigating an audit.

At Tax Professionals, we have extensive experience managing hundreds of IRD audits. Contact us today at 09 625 0025, and let our expertise guide you through the process with confidence and ease.