What happens if you are selected for an IRD tax field audit or investigation?

2024-09-06

“If you have been notified by the IRD that you have been selected for a tax field audit or investigation, it’s vital to act immediately and to get advice from a tax specialist like PKF Hong Kong. The IRD’s enquiries are rarely straightforward and need to be handled with care – as failure to do so may result in heavy penalties or prosecution. Contact PKF Hong Kong now for a confidential and free initial consultation with one of our tax specialists.”

Experienced in representing business proprietors and companies in IRD tax field audits and investigations

During 2021/22, the Hong Kong Inland Revenue Department (“IRD”) completed 1,720 tax field audit and investigation cases (including tax avoidance cases), from which it successfully recovered back tax and penalties of around HK$2.9 billion.

Like many tax authorities around the world, tax field audits and investigations are generally considered key tools of the IRD in increasing its tax revenue.

It is no secret that the IRD is always actively identifying and targeting areas where it believes that tax revenue is at risk – particularly for non-compliance issues and tax evasion.

Any tax return filed with the IRD could result in a tax field audit or investigation so it is vital to consider what you would do if you are selected. It is not just the costs involved, but also the time it takes to deal with the IRD’s tax enquiries as well as the considerable stress and pressure you will have to experience throughout the whole tax field audit and investigation process that matter. Besides, even if your tax filings have been prepared in a proper manner and contain nothing that violates the tax laws, becoming a target of an IRD tax field audit or investigation may to some extent have a negative impact on the daily operations and public perceptions of your business.

How PKF can help

At PKF Hong Kong, our tax specialists possess an excellent working knowledge of the IRD’s practices as well as what an IRD field auditor or investigator can and cannot do. Our tax specialists have the expertise to work closely with you to identify key areas of a field audit or investigation, liaise with the IRD to clarify your position, avoid misunderstandings, explore different ways to mitigate potential tax penalties, draft replies to the IRD’s enquiries and prepare settlement proposals, etc., with the primary aim of bringing the IRD’s challenge to a successful and quick conclusion for our clients.

PKF Hong Kong's tax specialists have considerable experience and boast an outstanding success rate in assisting our clients in facing an IRD tax field audit or investigation. We always aim to help our clients achieve satisfactory results at the most reasonable price in the shortest possible time.

What we do

• Assess the tax consequences;
• Draft responses to the IRD’s enquiries;
• Represent you attending meetings with the IRD;
• Formulate tactics and negotiating with the IRD to mitigate penalties;
• Make formal representations and/or complaints, if necessary; and
• Ensure that the IRD officers do not obtain the information they are not entitled to;

PKF Hong Kong also maintains close working relationships with other specialists such as auditors, tax barristers, forensic accountants, etc., who are sometimes needed when it comes to reaching a settlement proposal with the IRD. We can involve them in your case if necessary.

Get in touch

If you receive a letter from the IRD telling you that you and/your business have been selected for a tax field audit or investigation section, contact our team without delay and speck to one of our tax specialists.

Please contact our team to request a no-obligation, free-of-charge discussion by phoning us during office hours on 2868 3682 and emailing us at enquiry@pkf-hk.com.

Any information given during the discussion or initial meeting will be treated in the strictest confidence.