WHAT IS AUDIT INSURANCE?

What is audit insurance? Audit insurance is an insurance to pay your accounting and legal costs if IRD start asking questions. It’s like travel insurance. It’s there to pay your costs when something goes wrong. So whether you get an audit, a risk review, or even just a “please provide more info” request from IRD, audit insurance will cover your costs.

As audits and risk reviews are specialist areas, you need specialist help. Just as you wouldn’t usually defend yourself in court – you use a lawyer – facing a risk review or audit is not to be taken lightly. That’s where this product comes into its own. But first, a summary of what’s to come:

30-second summary

• Covers your accounting and legal costs if IRD (or another government agency, e.g. ACC, Customs) opens an enquiry, risk review, or audit.
• Applies to returns we’ve reviewed as your tax agent, plus GST/PAYE you self-file, as long as we’re your linked agent for income tax.
• No excess, up to $15,000 per client group (as of 2026).
• Doesn’t cover self-filed returns with no agent involved, proactive voluntary disclosures, or cases involving gross carelessness penalties (40%+).
• Costs from around $241/year including GST, and is fully tax-deductible.

What is covered?

You are covered for:

• Any IRD-initiated enquiry, and queries from any authorised government agency (e.g. ACC, Customs on GST) — not just IRD.
• Income tax and FBT returns reviewed by the tax agent (us) are covered; GST/PAYE returns clients self-file are also included, as long as Epsomtax.com Limited is your linked agent for income tax.
• No excess, up to the coverage limit (which is $15,000 per client group as of 2026); additional cover available on request.
• A new client’s prior-year returns are covered if you were with a registered tax agent at the time; not covered if you self-filed with no agent.
• If we need to engage a specialist (e.g. a crypto/cyber specialist or tax lawyer) to respond to an inbound query, that cost is covered too.

What is not covered?

• Self-filed FBT or income tax returns that were never reviewed by a registered tax agent/ Epsomtax.com Limited.
• Prior returns filed with no connection to a registered tax agent.
• Audits triggered by non-compliance with a reasonable IRD request (e.g. late filing) — though only the portion of time dealing with the non-compliance itself is excluded; time spent on the substantive tax position may still be claimed if IRD notes that is being reviewed for a separate reason, and time is tracked separately.
• Claims where shortfall penalties of gross carelessness (40%+) or higher are imposed — in this case, no time and no penalties are covered.
• Voluntary disclosures — but any follow-up IRD query after a voluntary disclosure or a periodic client review is completed and finalised may be covered.

Examples

To make the cover easier to picture, here’s how it plays out in some real-world scenarios:

A client’s return was filed late and IRD is now auditing several years, including property-related detail — is that covered? Yes, in part. The time is split: time spent explaining or justifying the late filing itself is excluded, but time spent on the substantive tax position (e.g. the property analysis) is covered. We track and bill these two components separately.

A data entry error is found dating back four years, and we plan to make a voluntary disclosure — is that covered? No. Proactive voluntary disclosures are excluded. However, if IRD raises the issue first and we respond to their query, that response is covered.

If a voluntary disclosure later leads IRD to open a deeper review of prior years, is that follow-on review covered? Yes. Once the voluntary disclosure itself is complete, any subsequent inbound IRD query — including a deeper look at prior years — is covered.

What about participating in client reviews, such as a recurring 3-yearly internal audit-style review, or an R&D approval process? The review or approval process itself isn’t covered. But any IRD query that comes in afterwards, once that review or approval has been completed and signed off, is covered.

How much is it?

For most clients, it costs from $241 per year including GST, and is 100% tax-deductible. For some, it could be under $100.

How does it work?

1. IRD contacts either us or you for more information, with a risk review or audit
2. After initially panicking, you remember you had purchased Audit insurance, so you relax. A bit.
3. You contact us, we make a claim on your behalf, and work through a response, roping in other professionals as needed.

Features & benefits

1. Reduce stress: “How do I respond to this?” Relax, we’ve got it covered.
2. Reduce financial pain: “What is this going to cost me?!” No worries, that’s what your policy is for
3. Live longer!

Further reading

• What does an IRD “Request for more information” or “Risk Review” look like? Click here.
• IRD: Audits and tax governance(opens in new tab) — how IRD audits records and what a risk review involves.
• IRD: Make a voluntary disclosure(opens in new tab) — what counts as a voluntary disclosure and how to make one.
• IRD: Shortfall penalties(opens in new tab) — how penalties are calculated, including the 40% gross carelessness threshold referenced above.

See this page for other FAQs

In summary

IRD enquiries can land on anyone’s desk, even if you’ve done everything right — a risk review or “please provide more information” letter doesn’t mean you’ve done anything wrong. Audit insurance simply means that if it happens, the cost of getting proper specialist help to respond isn’t an added shock on top of the stress. For most clients it costs less than a couple of dinners out a year, is tax-deductible, and covers you up to $15,000 per client group with no excess.

Want coverage?

Talk to us about adding audit insurance to your policy, or ask us anything about how the cover applies to your situation. Contact us and we’ll talk you through it.