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Ask an expert

In our regular feature we answer readers’ questions on any area in the world of finance, accounting, audit, tax, and other business-related areas. Take advantage of our expertise and send your question to questions@staplesrodway.com and one of our specialists may answer it in a forthcoming issue of NUMBERS.

I own a restaurant, and was told that Inland Revenue is using Artificial Intelligence tools to review people in the hospitality industry. What do I need to do?

Answer from Mike Rudd, Tax Director
Baker Tilly Staples Rodway Auckland

Inland Revenue has been running a succession of campaigns since late last year, first with ‘Every undeclared cash job leaves a trail’ for the building sector and now ‘Sleep Easy’ for the hospitality industry.

Inland Revenue is increasingly using AI to identify anomalies, in particular where businesses may be operating in the “hidden economy”. For example, they may compare your business’s gross profit against those of a similar size and type and  ask for reasons why there is a difference between you and the industry average.

The ‘Sleep Easy’ campaign aims to identify businesses failing to record sales, paying wages off the books and discrepancies between supplies bought and sold. The message is that if you keep good business records, are returning all your income and correctly deducting PAYE or withholding tax when required; then you can sleep easy.

The algorithms used to analyse big data are getting better with time, which is why it is essential to ensure that your bookkeeping is complete, accurate, and timely.

If Inland Revenue’s computers suspect that your tax records are not accurate, they are likely to contact you before launching a full investigation. Should the tax man come to visit at your place of business, we recommend that you get in contact with your Staples Rodway advisor immediately.

Better yet, we recommend that you ensure that your records and systems have been reviewed by Staples Rodway, before Inland Revenue come knocking, so that you can make sure you are doing the right thing and, importantly, take any necessary steps if there has been non-compliance to minimise exposure to penalties.

If you have any concerns that you might not be complying with your tax obligations, we recommend that you get in contact with your advisor to discuss your next steps.

NOTE: The above is general advice only and should not be relied upon as specific circumstances can vary. Please contact your Baker Tilly Staples Rodway advisor for specific advice.

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