Tax agents tiring of IRD interference

Inland Revenue is being told to butt out and stop communicating directly with accountants’ clients.

Tax agents across the country are complaining that the department is acting outside its remit by sending sometimes-confusing messages straight to their clients, which leaves their accountants ‘‘picking up the pieces’’.

In some cases, the information the department sent was incorrect or ran counter to what they had already been told.

Tax consultant Terry Baucher said it was something that accountants were feeling increasingly exasperated about.

He said it felt like the department was trying to undermine their relationship with clients, and it was very disruptive to their businesses. ‘‘This is something that is just causing chaos ... At some point someone somewhere is going to sue Inland Revenue.’’

It created extra work for tax agents who had to talk to their clients about the communication they had received, even if only to tell them that no changes needed to be made.

Jeff Owens, of Owens Tax Advisors, said he’d seen taxpayers being sent

letters warning them of large amounts of tax due ‘‘soon’’. But it would then transpire that the debt was not due for many months and it had already been arranged for payment. ‘‘The prime example being provisional tax not due until as late as January or May next year.’’

Some people were told that a tax return had been submitted when, in fact, the department had generated one for them, not knowing they had other income that needed to be accounted for.

‘‘Agents are equipped to sift out and correct Inland Revenue’s correspondence but don’t get the opportunity. At best, a large proportion of such correspondence is duplicating what the agent is going to tell their clients anyway and simply services to make clients panic and generate more unnecessary dialogue between taxpayers, agents and Inland Revenue. So much correspondence that Inland Revenue has taken senior staff off their substantive roles and allocated them to answering phones or replying to routine correspondence.’’

Inland Revenue spokesman Rowan McArthur said letters that should go to accountants were being sent directly to clients because of the changes to the department’s computer system. ‘‘It’s something we’ve been talking about with accountants for a while now and we’re working on fixing it.’’

He said some letters had always been intended to go direct to clients but some were sent in error.

Craig Macalister, tax advisory partner at Findex, said his firm experienced it regularly.

He said some small accountancy practises were too concerned to raise the issue with Inland Revenue directly.

‘‘I get it that at times Inland Revenue need to go direct to the clients, but that should be the exception. Corresponding with a tax agent’s clients directly undermines the relationship with the client. Unfortunately Inland Revenue are oblivious to this or just don’t care.’’

A survey of members last year found that some thought Inland Revenue was trying to phase out tax agents.

‘‘Agents are equipped to sift out and correct Inland Revenue’s correspondence but don’t get the opportunity.’’

Jeff Owens