IRD look to end Voluntary Disclosure and Clamp Down on Tax Avoidance
The IRD are making changes to Voluntary Disclosure policies which could affect you, if for example, you haven't declared income, have unlawfully avoided paying tax or have been blissfully unaware that you were in fact, supposed to file a return for rental property income. Contact us we can help.
The latest updates from the IRD indicate that the end is on the horizon for the voluntary disclosure regime, which allows taxpayers to ‘fess up’ and negotiate over outstanding tax returns and penalties.
In particular, we should note the 31 March 2013 deadline, especially where arrangements may resemble “Penny and Hooper” style structures. You may remember in this situation two orthopaedic surgeons had avoided income tax by paying themselves low salaries through a structure of companies and Trusts. The structure itself was not illegal but the extreme of tax minimisation bordered on tax avoidance as the surgeons were not paid at market rates. The Inland Revenue has since been investigating structures that reduce personal income tax and have been in communication with “at-risk” taxpayers.
This “voluntary disclosure” regime is to be replaced by an audit style approach. The implications of this change are to increase costs for slow taxpayers; and a reduced ability for your tax agents to negotiate arrangements and easier terms with the department may inevitably result (potentially including negotiation of penalties incurred).
If you would like to double check or are concerned about any potential issues, please contact us in the first instance. Our team will assess your situation and either give you the 'all clear', or help you present your case in the best possible light and negotiate arrangements with the IRD.
Posted: Wed 19 Dec 2012