The IRD can be a scary bunch, even if you don’t get offside with them, so it’s best to be very wary of how you talk to them and handle any issues that arise. The consequences of getting it wrong can deplete your wallet considerably, perhaps even leading to bankruptcy and financial ruin as many have found.
Ideally of course, it’s best to avoid getting into a situation where it’s necessary to even have contract with the IRD. If you file all your returns and pay all your taxes on time and take a reasonable approach with taxes you can keep a low profile and thus avoid getting yourself into an audit or enquiry situation. After all, it’s mostly common sense and there’s always someone out there doing something really stupid e.g. tax returns showing $10,000 worth of income with no other means of support, to take the heat.
The other thing to do is to avoid asking the IRD for advice. If you ask what to them are easy questions it’s a bit of a giveaway that you don’t know what you’re doing which means that they might come a-calling to see what else you don’t know or have done wrong on your returns. In any case, it’s a bit like the poacher asking the gamekeeper for advice! Are they really going to go out of their way to help you reduce their taxes? Most amazing to me are people who used to deliver their books to the IRD and ask them to work out their taxes - how crazy is that?
Writing to the IRD is a slow and tedious way to make contact and you can’t email them unless you use the IRD’s secure email system which is difficult to use for some. Telephone is OK if you have plenty of time on your hands but remember that all telephone calls with the IRD are recorded and it’s easy to slip up on the phone and say too much. You could be trapped into saying the wrong thing whereas if a third party is speaking to the IRD on your behalf it’s easy for them just to say “I’m not sure about that I’ll have to check with my client”.
This is where a good and honest accountant can save you money despite their fees as well as reduce stress and save time. An accountant experienced in tax and business knows the rules and can speak the same language as the IRD. They can also stand their ground with the IRD and make sure you’re not bullied or railroaded by over-zealous officials trying to earn brownie points and collect more tax than they should. It also helps hugely that the accountant is once-removed from you as that prevents emotions getting in the way.
The accountant will also have the use of Tax Agent’s secure email system (which avoids wasting all that time hanging on the phone and being trapped in difficult and potentially embarrassing situations) and a priority, special quicker-to-get-through telephone line reserved for tax agents.
So take care with the IRD. It’s really best to avoid any dealings with the IRD so ask around for a referral to a good tax accountant. Life these days is expensive so you don’t want to give any more of your hard earned money to the IRD than you need to!
If you need help with the IRD call Nick today on 021 225 6425 or email.