IRD Cracking Down On Debt
As we all know Inland Revenue during the Covid pandemic has been taking a cooperative approach to tax debt but that is now rapidly changing. Over the past month we have received a number of phone calls from Inland Revenue about taxes our clients owe. It is very clear from the phone calls that Inland Revenue are stepping up their efforts and beginning to crack down on outstanding debt.
GST, PAYE and KiwiSaver Are The First Target
The amount of outstanding PAYE and employee KiwiSaver payments have doubled, and overdue GST has tripled, over the past five years. This is a massive problem. It’s probably no surprise, then, to hear that the first priority for Inland Revenue when it comes to chasing debt will be businesses that have failed to pay their employee deductions.
If, for any reason, you think you might be short on paying PAYE and GST , get in touch with us immediately. We can work with Inland Revenue and find solutions to help you – the sooner we start, the better, and the more effectively we can minimise any penalties.
Other areas of focus for the Inland Revenue
Over the past year, Inland Revenue has also been taking a tough approach to some other specific types of tax concerns:
We don't see this as the last of the tough approaches that they are taking, it is our expectation that Inland Revenue will continue to monitor and police differing industries and tax types. We therefore recommend that if you are uncertain about what you may be claiming or doing through your business that you talk to us first. We can then give you guidance and minimise any potential issues for the future.
If you owe tax, don’t bury your head in the sand
As always with tax debt the key thing to do if you run into trouble, is talk to us and we can talk to Inland Revenue on your behalf. It is actually surprising how little tax debt can soon become unmanageable for people. Inland Revenue’s own research suggests that break point is as little as $10,000. From our experience we would tend to agree with this.
The key thing is, if you get in front of Inland Revenue early, tell them that you have hit difficulties and want to arrange an instalment plan, they will be cooperative. Where they won't be cooperative, and in fact they may look to take action and prosecute, is where someone persistently fails to meet their obligations in relation to paying over PAYE and GST and then tries to evade any responsibility by attempting to liquidate the company. Such scenarios increasingly will lead to prosecutions by Inland Revenue
GST, PAYE and KiwiSaver Are The First Target
The amount of outstanding PAYE and employee KiwiSaver payments have doubled, and overdue GST has tripled, over the past five years. This is a massive problem. It’s probably no surprise, then, to hear that the first priority for Inland Revenue when it comes to chasing debt will be businesses that have failed to pay their employee deductions.
If, for any reason, you think you might be short on paying PAYE and GST , get in touch with us immediately. We can work with Inland Revenue and find solutions to help you – the sooner we start, the better, and the more effectively we can minimise any penalties.
Other areas of focus for the Inland Revenue
Over the past year, Inland Revenue has also been taking a tough approach to some other specific types of tax concerns:
- high earners who think they might be able to avoid paying the new 39% top tax rate using companies and trusts
- ute owners who avoid paying fringe benefit taxes
- real estate agents overstating their expenses or underreporting their income
- GST on land purchases by developers
- phoenix companies that are shut down and restarted to avoid tax debts
We don't see this as the last of the tough approaches that they are taking, it is our expectation that Inland Revenue will continue to monitor and police differing industries and tax types. We therefore recommend that if you are uncertain about what you may be claiming or doing through your business that you talk to us first. We can then give you guidance and minimise any potential issues for the future.
If you owe tax, don’t bury your head in the sand
As always with tax debt the key thing to do if you run into trouble, is talk to us and we can talk to Inland Revenue on your behalf. It is actually surprising how little tax debt can soon become unmanageable for people. Inland Revenue’s own research suggests that break point is as little as $10,000. From our experience we would tend to agree with this.
The key thing is, if you get in front of Inland Revenue early, tell them that you have hit difficulties and want to arrange an instalment plan, they will be cooperative. Where they won't be cooperative, and in fact they may look to take action and prosecute, is where someone persistently fails to meet their obligations in relation to paying over PAYE and GST and then tries to evade any responsibility by attempting to liquidate the company. Such scenarios increasingly will lead to prosecutions by Inland Revenue
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