I received a letter about an Inland Revenue audit, what should I expect?

An audit or risk review is a formal examination by Inland Revenue of your tax records to check compliance, and it can cover income tax, GST, PAYE or other obligations, under its powers in the Tax Administration Act 1994, which include requiring you to provide books, records and information. Read the letter carefully to understand the scope and the period being reviewed, and respond within the timeframes given, seeking an extension if genuinely needed. It is generally wise to engage a tax agent or lawyer experienced in audits to manage communications, review your records before submission and represent your interests, since anything you provide can be used to support an assessment. Be honest and thorough, since incomplete or misleading responses can increase penalties. If the audit identifies discrepancies, you may have the opportunity to make a voluntary disclosure of any further errors you find yourself, which can reduce penalties compared to Inland Revenue discovering them independently.