Got something you want to tell IRD about your tax affairs?
When you work hard, the last thing anyone wants to do is pay tax – but it’s a fact of life. Sometimes though, people do cut corners or get bad advice or don’t fully disclose everything about their finances to their accountant and/or IRD. Sometimes this is omitted income or expenses incorrectly claimed but this can be a serious issue in the long term.
Inland Revenue does have a process allowing taxpayers to make voluntary disclosures: this means a taxpayer acknowledges the omitted income or incorrectly claimed expenses and wants to disclose this to Inland Revenue with a view to a reduction in the penalties which can be imposed by Inland Revenue had they had to discover it via an audit.
Inland Revenue can prosecute taxpayers criminally too for PAYE and GST so be careful.
Don’t delay with underpaid tax – Sort it out
If you ignore your under-paid tax position, the chances are it will be discovered by Inland Revenue and your case will progress through the full audit process and the tougher the penalties you could face.
Gina Jansen Lawyers are experienced with the voluntary disclosure process and what a taxpayer should say in the disclosure which needs to be full and complete.
When should I make a voluntary disclosure?
- If an Inland Revenue audit is imminent as you have received a preliminary letter.
- To reduce the chances of prosecution because you made a pre-notification voluntary disclosure.
- You want to own up to past errors and/or omissions.
What penalties are there?
The key to the penalties imposed is whether you are making a disclosure prior to being notified of an audit, or after notification but before it is underway. In some instances, if the omissions are insignificant, you may not receive penalties. There can be a 40% penalty reduction after being notified but the risk of prosecution remains. Gina Jansen Lawyers can negotiate that IRD does not prosecute.
The penalty regime depends on whether IRD considers you are:
- guilty of gross carelessness or tax evasion; or
- not taken reasonable care; or
- taken an unacceptable tax position; or
- have unacceptably misinterpreted the tax regulations.