Articles by John Rowe
I have written several blogs warning taxpayers about the aggressive tactics the IRD have sometimes been employing. This is a trend that is unfortunately shows no signs of abating. In fact, it appears to be getting worse.
Recently we’ve noticed some IRD auditors jumping from an initial (you’re being audited) letter, straight to statutory demands for information within unrealistic timeframes. Historically IRD have tended to work constructively with the taxpayer to find mutually acceptable timeframes. Unfortunately, there appears to be a developing trend where some IRD investigators have been using their statutory powers as a means of force to apply unnecessary time pressure, rather than trying to work with a taxpayer and their agent. We note with some concern that the use of these types of tactics seems to have been increasing.
Historically, the IRD would sent out a letter, notifying tax payers of a risk review (i.e. checking of limited areas) or a full audit. Then a reasonable timeframe would be negotiated, taking into account the client’s business and the workload both of the client and their advisers. Traditionally the IRD has been very accommodating. Now, however, we have been noticing a few instances where investigators are requesting information they are not entitled to or which exceeds their authority.
Rather than working constructively, certain investigators are using statutory powers to demand information, which can lead to the breakdown of relationships between the IRD, taxpayers and their advisers. This risks the matter turning from a straightforward audit into an adversarial process, which should be avoided, if possible. Additionally, practitioners have generally had good working relationships with IRD which is in the best interests of IRD and taxpayers as it encourages everyone to meet their responsibilities. If investigators stretch the rules and processes, it risks undermining that previously constructive position.
To illustrate, the IRD recently demanded that a client provide them with 15 years of information, when they are legally only required to hold such information for seven years. When we made this point, IRD issued a statutory demand for information to be supplied within an unreasonable timeframe, and it looked as though they were extracting revenge for us correcting them. This is not the right way to deal with such matters – a satisfactory outcome for all concerned is far more likely to be achieved if the taxpayer, their advisers and IRD work constructively together. Bullying and scare tactics are counterproductive and cause unnecessary stress for everybody.
At GRA we try to maintain a good relationship with IRD and help our clients to meet their obligations. We are always willing to work constructively to achieve this outcome. The recent attitude of some of IRD’s investigators unfortunately makes this so much harder, and can lead to an unnecessary breakdown of relationships. IRD are entitled to collect overdue tax, and that is right and proper, but we question the current methods some investigators are using because they are more destructive than effective, and often result in a worse outcome for both the government and the taxpayer. I recently talked to senior members of the IRD about this and they were very receptive. Hopefully they will pursue this further in the new year.If you are the victim of aggressive IRD tactics, please talk to us. It is far better to get professionals like GRA to deal with the IRD on your behalf than to try and go it alone. We know when they are overstepping the mark, and are not afraid to call them out on it. We also have a great deal of experience in resolving issues with IRD in a constructive way that benefits everyone concerned. You can contact us on (09) 522 7955, [email protected] or by filling in our online contact form. We would be very pleased to help you.
This letter is to express my appreciation for the assistance and encouragement of both Anthony Lipscombe and particularly John Heaslip over the last financial year. The period since activating my trading trust has been one of considerable stress, as well as personal development, as I embarked on this as a relative business neophyte with virtually no awareness of the contemporary requirements of running a business, particularly the financial records aspect. During much of this period I have therefore felt considerable out of my depth. However I have been lucky enough to have had the benefit of the advice and support of John Heaslip in rationalizing what was a fairly chaotic set of records of the first year property trading. I am able to say that John in particular, has been unstinting in his attention to my needs and has done so in a manner which has never alluded to my extremely rudimentary grasp of managing a business, or even of being unable to set out a spread sheet properly. The result of the above guidance is that now, although my trading trust would still not be able to operate without the advice of GRA, I do least feel a sense of satisfaction that I have got to my present point without major disaster and that my property trust does now have some kind of firmer basis for any future activities - Name withheld by request
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