Protect yourself against the costs of being reviewed, investigated or audited by the Inland Revenue Department!
There are definitely ways to reduce your chances of being audited or investigated, such as submitting your returns on time, paying your taxes on time, keeping accurate and complete records, showing reasonable income or drawings, etc. The IRD also publishes compliance focus areas, showing what they will concentrate on. However, you can do nothing to avoid a random tax audit.
What is Audit Shield?
Miller Johnson Limited has taken out a Master Policy (underwritten by Vero Liability Insurance), and our clients are eligible to enrol in this policy. The premiums are based on whether you’re an individual, partnership, or business. The policy provides for the payment of the professional fees (that normally you would have to pay) if we are required to respond on your behalf to an audit, review, or investigation by the Inland Revenue or any other government body (up to the limit specified on your acceptance form). So while you still have to undergo the audit or investigation, at least you can rest assured that our fees are covered by the insurance.
The coverage also includes enquiries by Inland Revenue on lodged returns. As an example, if the IRD calls us to discuss your GST return and ask for clarification, that work by us is covered by Audit Shield and is not charged to the client.
But I’m honest, and there shouldn’t be any audit or penalties if you’re doing your job properly!
There is a three-part response to this. First, we presume you’re honest and that you are providing us with the correct information. Second, we do our job effectively and efficiently. We always strive to be 100% accurate and we seek every legitimate deduction on your behalf. But the third part is the most important thing you need to understand. The IRD or other government body can instigate a review, audit or investigation for any reason.
We do know there are certain events that trigger their attention. For example, one of our clients had borrowed some money from overseas, and this triggered an investigation. For another client, IRD believed the company’s receipts did not match the area’s level of business and they conducted an audit. In both cases, the IRD found nothing and there were no penalties. However, to get these cases resolved required extensive assistance and in one case the cost was significant. Clients can also be targeted for audits or reviews at random.
In all cases, the professional fees incurred by responding to the IRD’s requests, and regular discussions and updates with the clients are borne by the clients. An audit is stressful enough, and we offer Audit Shield so that the professional fees (including fees of any other professionals we need to engage on your behalf, e.g. solicitors) are one less worry for you.
Can I claim the premium as a business expense?
Yes, a tax deduction should ordinarily be claimable for your payment if you are in business or self-employed.
From when am I covered?
Your cover begins from the next day after receipt of your insurance premium. Any notification you receive of an audit, review, or investigation needs to be received after this date to be eligible for coverage.