What an IRD Audit Actually Means (And What You Should Do Next)
Decoding IRD – PART 2
This article explains what an IRD audit New Zealand actually means, why Inland Revenue conducts audits, and how to respond correctly.
Receiving an IRD audit notice can feel stressful, but it does not automatically mean you’ve done something wrong. Audits are a standard Inland Revenue process to confirm accuracy and compliance.
Handled correctly, many audits close with no penalties. Handled poorly, they can escalate quickly. That’s why audits should be managed with professional support from IRD Guru, working alongside DFK Orb360 Chartered Accountants.
What Is an IRD Audit?
An IRD audit is a formal review by Inland Revenue to verify whether:
- Tax returns are accurate
- GST, PAYE, and income tax are correctly reported
- Business records align with declarations
- New Zealand tax laws are being followed
Audits can apply to individuals, sole traders, companies, and trusts.
🔗 IRD audit and investigation guidelines (official source)
Why Does IRD Select Certain Businesses or Individuals?
Common triggers for IRD audits include:
- Unusual income or expense patterns
- GST refund claims
- Industry-based risk profiling
- Late or inconsistent filings
- Random compliance reviews
Selection is often data-driven and does not imply wrongdoing.
What Happens During an IRD Audit?
- Formal audit notification from IRD
- Request for records and explanations
- Review and clarification phase
- Adjustments (if required)
- Final outcome or resolution
IRD may review:
- Accounting records
- Bank statements
- GST and income tax filings
- Payroll and PAYE data
- Supporting invoices and contracts
This is where structured accounting support from DFK Orb360’s accounting services becomes critical.
Why Professional Audit Handling Matters
Poor audit management can result in:
- Penalties and interest
- Tax reassessments
- Extended investigations
- Loss of negotiation flexibility
Professional representation ensures the audit remains compliant, proportionate, and fair.
Learn more about IRD compliance and audit representation .
What To Do If You Receive an IRD Audit Notice
- Do not panic
- Do not rush your response
- Do not submit incomplete documentation
📌 Always seek expert advice before replying.
👉 Speak to IRD Guru before responding to an audit notice
Frequently Asked Questions
Does an IRD audit mean I will be penalised?
No. Many audits close without penalties. Outcomes depend on accuracy, documentation, and response quality.
How far back can IRD audit?
IRD can review multiple previous tax years depending on the audit scope.