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Richard Philp New Zealand Inland Revenue Department

Richard Philp New Zealand Inland Revenue Department. Session No. 7 Conclusions for tax policy and revenue administration from compliance studies, perception surveys and micro and small business complaints about the administrative burden of taxation.

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Richard Philp New Zealand Inland Revenue Department

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  1. Richard PhilpNew ZealandInland Revenue Department Session No. 7 Conclusions for tax policy and revenue administration from compliance studies, perception surveys and micro and small business complaints about the administrative burden of taxation

  2. PERCEPTIONS OFTAX AGENTS & SME BUSINESSESFOLLOWING AN AUDIT

  3. MEASURING OUR EFFECTIVENESS TAX AGENTS: • To obtain their views of the audit experience to assist Inland Revenue [IR] in making business planning decisions and areas where we can improve performance of the audit function. • provide IR with information to respond to stakeholder and media questions and commentary about the process of audit. SMALL AND MEDIUM BUSINESS • The primary objectives are to measure: • businesses’ understanding and expectations of audits • overall perceptions of the audit experience • perceptions of specific elements of the audit process • businesses’ suggestions for improvement • likely effect of the audit on future behaviour.

  4. TAX AGENTS SURVEY • First survey of tax agents • TWO PHASED APPROACH: 1.QUALITATIVE exploratory In Depth interviews with 15 tax agents to explore a range of perspectives where they believe the audit process could be improved. 2.QUANTITATIVEsurvey of 300 tax agents using a structured questionnaire from the Qualitative interviews. • 70% members of NZICA • Margin of error +/- 5.7%

  5. SME SURVEY • 6TH Survey • 300 interviews conducted by telephone in June 2009 • Margin of error +/- 5.6%

  6. KEY FINDINGSTAX AGENTS SURVEY • Tax Agents generally have divided opinions about (a) their perceptions of the audit process and (b) IR’s overall performance. • The results point to some tensions in tax agents’ views between seeing their role as helping to reduce clients’ tax and increase their wealth, and assisting clients to become more tax compliant.

  7. OVERALL PERCEPTIONS OF THE AUDIT PROCESS (TAX AGENTS)

  8. COMPLIANCE AND PENALTIES

  9. COMPLIANCE AND PENALTIES

  10. IN SUMMARY TAX AGENTS ARE;

  11. KEY FINDINGSSME SURVEYOVERALL PERCEPTIONS • 70% of respondents view the audit experience favourably in the 2009 survey, similar to 2008. • 72% of respondents agree the audit was ‘handled well’ by Inland Revenue, compared to 71% in 2008 • 75% agree the audit was ‘conducted in a reasonable manner’ compared to 80% in 2008. • Small decline in perception the audit experience helped SME’s become more tax compliant.

  12. SME RATINGS

  13. RESULT OF THE AUDITSME SURVEY • 73% of businesses said the Investigator explained IR’s expectation around payment of additional tax which is similar to last year. • 53% of businesses received a written explanation of the proposed tax adjustment whilst 12% did not. 32% said no adjustment was made. • 51% of businesses who received a proposed tax adjustment said they were informed about the disputes process if they disagreed.

  14. THEMES IDENTIFIED FROM BOTH SURVEY’S

  15. INITIATIVES TO ADDRESS THE FINDINGS: • Clear communication and discussion of the key findings of these surveys with Investigations managers, especially team leaders and investigators plus associated business areas who contribute to the audit process. • Reinforcing the responsibilities and accountabilities expected of investigations at all levels. • Increased monitoring of audit timeliness and use of a Case Director role for selected cases where independent guidance and resolution is required. • Review relevant best practice statements to increase certainty for customers and ensuring practice integrity. Key examples include: customer contact and relationship practices; increased transparency with the customer around risks identified that lead to an audit; and the timeliness of referrals between investigations and other internal units who support the audit process, eg Legal & Technical Services. • Deploy use of e-mail as a communication channel [previously not an option] especially with tax agents [as well as taxpayers] during an audit - support this with clear operating practices. • Continue to improve the “commercial awareness” of investigators via: • knowledge sharing forums • use recently appointed staff with specialist/extensive external commercial experience to share insights and knowledge on topical issues.

  16. CONCLUSION

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