Facing a tax audit without fear

Albany Toyota

Case study

If there are two words in the business vocabulary which generate more fear and trepidation than any others they are quite possibly ‘tax audit’. This is not necessarily because people know that they have something to hide, but more often a fear of what they don’t know. Taxation is complex. People worry that the tax department won’t see things the same way they do, or that they’ll turn up something that’s been overlooked, or that they simply won’t be able to provide the IRD with the information they require.

At PricewaterhouseCoopers, while we agree that a tax audit is hardly something to look forward to, we can alleviate some of the fear around it by carrying out a Tax Warrant of Fitness on your company to identify any weak spots before the IRD do. This was exactly what we did for Albany Toyota last year. Just six months later they were actually audited by the IRD.

Albany Toyota’s Group Accountant, Chris Rippon, talks about the process: “Tax is never straight-forward. Tax rates and tax laws change all the time. Processing all the information is time consuming and in our business GST can be a nightmare. PwC are very good at filtering that mass of information, providing us with tax tips and suggesting areas that we might need to look at.

“We felt that there were areas that needed some attention, that’s why we asked PwC to run a tax WOF on us. As a result of that process we made some changes to the way we were handling GST. When the tax audit came up we felt well prepared and able to show them that we had taken a pro active approach to compliance.

“Obviously the IRD are going to look more favourably on a company that has taken steps to understand the issues, and to comply, than a company that doesn’t. In the end if you have good advice and are properly prepared there’s no need to fear a tax audit.“

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