The hospitality sector is the latest target of Inland Revenue’s compliance programme or, as Inland Revenue are calling it, the “Sleep Easy” marketing campaign. Inland Revenue considers the hospitality sector to be a high-risk sector when it comes to non-compliance with tax obligations. Inland Revenue is targeting the hospitality sector as a sector that has poor record keeping practices, incomplete or inaccurate employer monthly schedule filings, high volumes of cash transactions and, consequently, a greater likelihood of under-reporting income. Inland Revenue also cites the relative ease of setting up a hospitality business and the high level of immigrant business operators who may have a lesser understanding of the requirements of New Zealand’s tax system as reasons for its interest in the sector.
The key message of the campaign is that keeping good business records is good for business and “you’ll sleep better knowing that your books are in order”. In addition to radio advertising, advertisements in hospitality sector magazines, and a direct mail out, Inland Revenue is planning to visit hospitality businesses. Accordingly, if you run a restaurant, cafe, bakery, takeaway, or liquor outlet you could receive a visit from Inland Revenue wanting to discuss your business records, as well as how you account for cash, and keep records of employees. They are also keen to encourage business owners to register for Inland Revenue’s online services.
If you receive a visit from Inland Revenue you are not required to volunteer any information about your current record-keeping systems and business processes. We suggest that rather than volunteering this information, you listen to what Inland Revenue has to say. If anything communicated by Inland Revenue causes you concern that you may not be complying with your tax obligations, contact your Crowe Horwath adviser to discuss whether you have an issue and, if so, how best to deal with it.
Inland Revenue may ask you if you have any concerns that you are not complying with your tax obligations or whether you have any potential non-compliance you wish to disclose. Again, we strongly recommend you discuss your concerns with your Crowe Horwath adviser first before talking to Inland Revenue. If you have an issue your Crowe Horwath adviser will be able to help you disclose this to Inland Revenue in a manner that may help reduce your exposure to penalties.
Technical Director – Tax Advisory