Published: 30 May 2026 | Last Updated: 30 May 2026

Received an IRD Audit Letter? What Should You Do Next?

Received an IRD Audit Letter? If so, you’re not alone. Every year, Inland Revenue reviews and audits New Zealand taxpayers to verify income, GST filings, deductions, expenses, and tax compliance obligations.

While receiving an audit letter can be stressful, it does not automatically mean you have done something wrong. However, it is important to take the notice seriously, understand what IRD is requesting, and respond appropriately.

Whether you’re a business owner, sole trader, contractor, property investor, landlord, or employee, understanding how an IRD audit works can help you avoid unnecessary complications and protect your tax position.

Quick Answer: Received an IRD Audit Letter?

If you have received an IRD audit letter, do not ignore it. Read the notice carefully, understand what information Inland Revenue is requesting, gather supporting documents, and respond within the required timeframe. If you are unsure how to proceed, consider seeking professional advice from an accountant experienced in dealing with IRD reviews and audits.

• ✓ Read the audit notice carefully
• ✓ Understand the review period
• ✓ Gather financial records
• ✓ Respond by the stated deadline
• ✓ Keep copies of all correspondence
• ✓ Seek professional advice if needed

Why Does IRD Send Audit Letters?

Inland Revenue conducts audits and reviews to ensure taxpayers are meeting their obligations under New Zealand tax laws.

An audit may be triggered by:

• GST discrepancies
• Large or unusual deductions
• Significant changes in reported income
• Industry benchmarking differences
• Unfiled tax returns
• Data matching reviews
• Random compliance checks

Importantly, receiving an audit notice does not automatically mean that a taxpayer has made a mistake or intentionally breached tax rules.

Official information: Inland Revenue New Zealand

What Should You Do After Receiving an IRD Audit Letter?

Read the Letter Carefully

The first step is understanding exactly what Inland Revenue is asking for.

The letter may include:

• The tax period under review
• The reason for the review
• Required documents
• Response deadlines
• Audit scope and information requests

Do Not Ignore the Notice

Ignoring an audit notice can create additional complications and may result in further correspondence or compliance concerns.

Gather Supporting Documentation

Depending on the review, IRD may request:

• Tax returns
• GST returns
• Bank statements
• Invoices and receipts
• Payroll records
• Accounting reports
• Supporting financial documentation

Keeping records organised can make the audit process significantly easier.

What Happens During an IRD Audit?

The audit process can vary depending on the circumstances, complexity, and scope of the review.

However, most audits generally follow a similar process.

Initial Review

IRD reviews the information provided and assesses whether additional clarification is required.

Requests for Additional Information

In some cases, Inland Revenue may request further documentation or explanations relating to transactions, deductions, income, GST, or expenses.

Discussions and Clarifications

Taxpayers may be asked to explain accounting records, tax positions, business activities, or financial transactions.

Audit Findings

At the conclusion of the review, Inland Revenue may determine:

• No changes are required
• Adjustments are required
• Additional tax may be payable
• Further review is necessary

Every audit outcome depends on the specific facts and circumstances of the taxpayer.

Can an Accountant Help During an IRD Audit?

Yes.

Many taxpayers seek professional assistance when responding to Inland Revenue reviews and audits.

An accountant may assist with:

• Reviewing requested information
• Preparing supporting documentation
• Communicating with IRD
• Explaining tax positions
• Managing deadlines
• Supporting compliance obligations

At IRD Guru, we regularly assist New Zealand taxpayers who need help understanding audit requests, organising financial records, and responding to Inland Revenue correspondence.

Common Mistakes Taxpayers Make During an Audit

Ignoring the Audit Letter

One of the most common mistakes is delaying action after receiving an audit notice.

Providing Incomplete Information

Missing records or incomplete responses can slow the review process and create additional questions.

Missing Important Deadlines

Failure to respond within the required timeframe may lead to further correspondence and compliance concerns.

Trying to Handle Complex Issues Alone

Where significant tax issues exist, professional guidance may help taxpayers understand their obligations and available options.

Can an IRD Audit Lead to Additional Tax?

Depending on the outcome, an audit may result in:

• No changes being required
• Tax adjustments
• Additional tax assessments
• Interest charges
• Penalties in some circumstances

Each case is assessed individually based on the facts available to Inland Revenue.

How Can You Prepare for an IRD Audit?

Good record keeping is one of the most effective ways to prepare for an audit.

Recommended practices include:

• Maintaining accurate accounting records
• Keeping GST documentation up to date
• Retaining invoices and receipts
• Filing tax returns on time
• Reconciling accounts regularly
• Seeking advice when uncertain

Official guidance: IRD Audits, Investigations and Disputes

Related IRD Guru Resources

Can an Accountant Talk to IRD on My Behalf?

Can an Accountant Negotiate With IRD?

IRD Tax Debt Relief New Zealand

IRD Payment Arrangements New Zealand

Received an IRD Audit Letter? Frequently Asked Questions

Received an IRD Audit Letter – Should I Be Worried?

Not necessarily. An audit does not automatically mean you have done anything wrong. However, it is important to respond appropriately and provide requested information.

Can an Accountant Help During an IRD Audit?

Yes. Many taxpayers seek professional assistance when dealing with Inland Revenue audits and reviews.

What Documents Does IRD Usually Request?

Common requests include tax returns, GST returns, bank statements, invoices, receipts, payroll records, and supporting financial documentation.

What Happens If I Ignore an IRD Audit Letter?

Ignoring an audit notice may result in additional correspondence, compliance concerns, or further action by Inland Revenue.

How Long Does an IRD Audit Take?

The duration of an audit varies depending on the complexity and scope of the review.

Expert Insight

One of the most common mistakes taxpayers make is assuming an audit letter can wait.

Responding promptly, maintaining organised records, and understanding what Inland Revenue is requesting can significantly improve the audit process and reduce stress.

Received an IRD Audit Letter? Taking action early, responding accurately, and understanding your obligations can help you navigate the audit process with greater confidence and clarity.