IRD visits bring discipline to erring businesses

IRD visits bring discipline to erring businesses

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Wellington, October 29, 2019

An aerial shot of Queenstown (Source IRD)

Inland Revenue Department (IRD) Compliance Staff have searched several Central Otago businesses and made unannounced visits to others, as part of its current hidden economy campaign targeting the hospitality sector.

High risk cash sales

Café, restaurants, bars and takeaways are the focus of the renewed campaign which follows the successful prosecution of five siblings in the Thai House case.

IRD Spokesman Richard Philp said that recent visits to Queenstown businesses have confirmed the sector has a high risk of cash sales not being reported and employees being paid under the table.  

“We certainly observed those behaviours during our visits. Using court-issued warrants, IRD staff seized wage records, computers and other business records. Staff also seized information on employer provided accommodation, rental properties, working for Families Tax credits and payroll matters,” he said.

Mr Philip issued the following statement:

 

PAYE information

Some of the items we removed includes information on staff paid in cash without PAYE being deducted and documents detailing cash deposits in to private bank accounts without being returned for GST and income tax purposes.

On unannounced visits we seized till records and lists of staff names and work rosters to check against employee details we hold.

During the operation, a number of taxpayers referred unprompted to the Thai House case and were aware IR was conducting search activities in Queenstown outside of normal business hours.

Voluntary disclosures

Since the operation ended two businesses have indicated they will make voluntary disclosures.

It is early days yet in the investigations but it is always good to see taxpayers or their agents contacting us early after a compliance visit, wanting to make a voluntary disclosure. It helps the taxpayer as they receive a reduction in the penalties imposed.

Also, we appreciate that investigations can be stressful, and we work with taxpayers to resolve matters in a timely manner so they can get on with their business.”  

As a taxpayer, you can also tell IR voluntarily about your own tax situation especially if you think there’s something wrong with your tax returns because you’ve left out some cash sales https://www.ird.govt.nz/tasks/make-a-voluntary-disclosure

Honesty pays

Most hospitality businesses are paying the right amount of tax and have good bookkeeping practices but there are still those that don’t.

Knowing that the books are all in good order takes a huge weight off a business owner’s shoulders and means they can sleep easy knowing they have good records.

We visited more than 30 taxpayers in Arrowtown, Queenstown, and Frankton to talk about our ‘Sleep Easy’ campaign and left information about record keeping with them. We want to support businesses to keep good records and ensure a level playing field for all.

Everyone should pay their fair share of tax because that’s what pays for the essential things that make New Zealand a great place to live.

Inform IRD of defaults

If you think someone’s not being honest about their tax you can anonymously report tax evasion https://www.classic.ird.govt.nz/tax-crime/report/report-tax-evasion.html or you can contact Inland Revenue if you think hospitality businesses are not declaring their full earnings hospitality@ird.govt.nz.

Statistics:

Three high risk businesses were searched under warrant

Six medium to high risk businesses received unannounced visits from IR staff

32 medium to low risk businesses were reminded of the ‘Sleep Easy’ campaign

Two businesses are considering making voluntary disclosures to IRD

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