Partner’s Opinion – Glen White
A combination of messaging and recent experience with the Inland Revenue Department (IRD) has clarified that it is departing from the more passive stance taken during the COVID-19 period and years that followed.
As you may have seen in the media, the IRD has recently created specialised units focused on recovering overdue debt, and it is increasingly using its existing legislative powers to ramp up its efforts to recover overdue tax debt.
We are now seeing evidence of this change in mindset firsthand. There is noticeably more activity in a range of areas, such as GST reviews, tax payment demand letters being issued with payment deadlines, and even payment notices being issued directly to banks instructing them to deduct overdue taxes directly from taxpayers’ bank accounts. IRD has very wide-ranging legislative authority to issue these notices, and other entities such as banks must comply or risk being prosecuted. As you have again probably noticed in the media, they are also initiating more liquidations and prosecutions for large unpaid balances.
As a result, we continue to recommend that our clients be proactive to avoid further IRD action.
- File and disclose early: Stay on top of returns and file them even if you cannot pay immediately.
- Engage early with the IRD: If you are unable to pay or have been contacted by the IRD, respond promptly to reduce the risk of the IRD being forced into other recovery action.
- Tax payment instalment arrangements: The IRD is open to setting up instalment arrangements for overdue tax, provided they cover all tax types and current tax obligations are also paid.
- Utilise professional guidance: We can assist with communicating with the IRD, setting up payment plans, and filing outstanding returns.
With the IRD’s heightened enforcement activity, both individuals and businesses in New Zealand face increased risks if their tax obligations are not met. If you need support, whether it is communicating with the IRD, applying for payment arrangements, or reviewing business structure and asset protection, please contact our office.
