1 April 2025 – 31 March 2026
Inland Revenue (IR) has materially increased its compliance and audit activity over the past year, and the impact is now clearly visible in Audit Shield claims data across New Zealand. Rather than a single spike, the pattern points to a sustained and deliberate lift in review and audit activity, supported by additional funding and a broader compliance mandate.
This article combines IR’s compliance focus with insights from the Accountancy Insurance claims team, highlighting how audit activity has evolved month by month and where professional fee exposure is increasingly concentrated.
Month-by-month trends confirm a sustained lift
Audit Shield claims data shows that elevated IR activity has been consistent rather than isolated to peak periods. Since April 2025, our claims team have been reporting on how the volume of Audit Shield claims activity has been shifting when compared to the same month in the prior year.
General observations of snap shots from April 2025 to March 2026 include:
- April 2025 claims volumes were up year on year, with a marked increase in the time required to manage reviews when compared to April 2024
- May and June 2025 saw Client Risk Reviews roughly double compared to the same month in 2024
- July 2025 delivered a sharp surge in GST Verification activity compared to July 2024.
- October 2025 recorded a standout year‑on‑year jump in claim activity compared to October 2024, led decisively by GST Verifications, Client Risk Reviews, and Full Audits.
- Audit Shield claims roared into 2026, with January and February showing materially higher activity compared to January and February 2025.
- March 2026 claims activity remained elevated at 37% higher than March 2025
Taken together, this data suggests IR is engaging earlier, more frequently, and across a broader range of tax types.
How claims activity has shifted year on year
Based on claims lodged between 1 April 2025 to 31 March 2026 as of 1 April 2026, the three most frequent Audit Shield claim categories compiled by the Accountancy Insurance claims team were:
- GST Verifications – 55.10% (1.77% increase)
- Income Tax Returns – 24.71% (6.15% decrease)
- Client Risk Reviews – 11.85% (4.11% increase)
GST Verifications remain the primary entry point
GST Verifications increased from 53.33% of Audit Shield claims in the period 1 April 2024 to 31 March 2025 to 55.10% in the period 1 April 2025 to 31 March 2026.
GST Verifications continues to be the most common trigger for IR engagement and is frequently the starting point for wider enquiries. In many cases, GST Verification acts as a gateway to expanded review scope.
Income Tax Return activity remains significant
Income Tax Return related claims declined from 30.86% in the period 1 April 2024 to 31 March 2025 to 24.71% in the period 1 April 2025 to 31 March 2026.
While proportionally lower, Income Tax Reviews continue to represent a significant share of claims and often involve substantial professional time once escalated.
Growth in Client Risk Reviews
Client Risk Reviews increased from 7.74% in the period 1 April 2024 to 31 March 2025 to 11.85% of total claims in the period 1 April 2025 to 31 March 2026.
This shift indicates greater IR focus on higher-effort engagements that require deeper professional involvement and longer response timeframes.
Other activity remains steady but persistent
Area Specific Reviews decreased from 2.55% in the period 1 April 2024 to 31 March 2025 to 1.29% in the period 1 April 2025 to 31 March 2026. While smaller in proportion, this still contributes consistently to overall claims volume.
Who is being reviewed and audited?
Between 1 April 2025 to 31 March 2026, among the mix of accounting firms and their participating clients working with Accountancy Insurance, the following client categories experienced the highest number of claims:
- Business Groups with less than $500k turnover (Category E)
- Business Groups with $1m – $3m turnover (Category G) and Sole Traders/Partnerships/Non-Trading Companies & Trusts (Category D)
- Business Groups with $500k – $1m turnover (Category F)
Audit Shield claims registered in New Zealand by category^:
IR funding and public signalling
Increased Audit Shield audit and review activity shows a correlation to the recent uplift in IR funding and a clear public mandate to apply it.
Between Budget 2024 and Budget 2025, IR received successive funding increases to expand compliance and collection capability. Budget 2025 confirmed $35 million per year in new permanent funding, on top of $29 million per year allocated in Budget 2024, with a further $26.5 million of existing funding extended and made ongoing.
In public statements and media releases throughout 2025, IR has consistently highlighted that this funding is being deployed to support earlier engagement with taxpayers, wider use of data-led risk identification, and deeper reviews where potential discrepancies are identified. IR has also publicly reported strong audit outcomes, including the discovery of significant undeclared tax through a relatively small number of audits, reinforcing the effectiveness of this approach.
Factors driving audit activity
Audit Shield claims experience over the past year suggests several interrelated factors are driving IR’s increased engagement:
- Additional funding enabling more case officers, earlier intervention, and higher review throughput
- Increased use of data analytics to identify risk patterns across GST, income tax, and rental property activity
- A strategic focus on GST verification as an entry point for wider enquiries
- Greater reliance on Client Risk Reviews to assess overall taxpayer behaviour before escalating matters
- Public revenue recovery results reinforcing confidence in audit-led compliance activity
Together, these factors have contributed to a sustained lift in review and audit activity rather than short-term or seasonal spikes.
Audit Shield Master Policy
With IR’s heightened compliance activity, accountants in New Zealand must remain vigilant. The surge in audits underscores the importance of Audit Shield, a comprehensive tax audit insurance solution that covers professional fees incurred in responding to IR reviews, audits, and investigations.
The latest figures confirm that audit activity is becoming more resource-intensive, making protection more essential than ever. For accounting firms, offering Audit Shield helps provide peace of mind and financial certainty for clients facing unexpected IR scrutiny.
To find out how your firm and your clients can benefit from Audit Shield, please contact the team at Accountancy Insurance.