Inland Revenue review of businesses’ record keeping

Inland Revenue has signalled it will be looking at businesses’ record keeping systems. Key targets will be that all jobs and all income are being recorded and that GST is being handled properly.

Recent prosecutions indicate that PAYE records are another hot topic, along with the corresponding employment records. If sketchy records are a quick way to set off IRD alarm bells, this could be a great time to do a sense check on your records and systems.

As a business owner you’re required by law to keep certain records. Poor record keeping lets you down just in terms of the penalties that apply for record keeping failures (up to $12,000). Inadequate systems also make it harder for you to keep track of what you owe, how much you have already paid, to whom and for what and who owes what to you. You lose track of things, miss key deadlines and your costs increase in proportion to how much of a nightmare it is to straighten it out. It also doesn’t help when you come to have an audit!

With the advances in online systems of recent years, many businesses have overhauled their systems and are in good shape to pull out regular management reports that detail their position clearly. However, there may still be areas where things fall through the cracks.

This applies particularly in industries such as construction where large amounts stay on the table as retentions until the job is completed and it is difficult to keep track potentially across several tax years. At the other end of the scale, the high volume and high speed cash transactions of the hospitality sector can also punch holes in the records.

Please contact us if you would like to discuss your particular situation.

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