The big bad wolf…

Hamish Mexted Reducing Tax

To most people, the IRD (the tax department for anyone lucky enough never to have come across them) is the big bad wolf.  They’re seen as this nasty bureaucracy which has an unwavering in desire to destroy your business and take a good chunk of your hard-earned money.  However, perceptions can often be wrong.

Unless you’re in the very small minority of people who deliberately don’t play by the rules, the IRD are generally pretty reasonable.  The key to it is being up front with them.  It’s when your head goes into the sand that the issues arise.

If you know something’s a miss in your business you could think about putting your hand up and disclosing it to them before they audit you.  This will generally (without making any guarantees) get you off any penalties.  Even if they’ve commenced an audit of your affairs, putting you hand up to something before they find it will often reduce any penalties they’re considering imposing on you.

Also if you’ve got a debt with the IRD it’s best to negotiate a repayment plan with them.  This will minimise any late payment penalties so long as you stick to the repayment plan.  The IRD normally appreciates the financial pressure you may be under so can be quite reasonable when it comes to the repayment terms they offer.

The other side of the coin is when the IRD do become the big bad wolf.  This could happen when you’ve got a particularly difficult investigator or if the IRD has caught wind of something, well, dodgy in your business.  Alternatively you might want some help negotiating a debt settlement with them because you feel like you’re not making headway with them yourself.  In these situations there are a range of ways to control the outcome of the audit/debt settlement – get in touch with your chartered accountant, or alternatively give iif a call.