What To Consider as Inland Revenue Cranks Up Tax Debt Recovery

Inland Revenue’s focus has shifted from pandemic relief back to tax compliance and  recovery of unpaid tax debts. If your business has outstanding liabilities—or you’re anticipating cashflow challenges—now is the time to act.

1. Clarify Your Total Outstanding Liability
Begin by confirming exactly which tax types and periods you owe:

• GST, PAYE and provisional tax balances
• Any penalties or interest that have already accrued
• Whether you’ve received reminders or compliance letters

Knowing your true exposure helps you assess affordability and urgency.

2. Review Cashflow & Hardship Triggers
If your business is under genuine financial strain, explore hardship relief:

• Hardship applications require recent bank statements and evidence of funding attempts
• For non-individual entities, prepare an IR591 cashflow forecast
• Relief under Section 183ABA (emergency events) can apply if your downturn links to declared emergencies

Understanding which relief you qualify for can preserve precious working capital. Financial relief options are available for taxpayers facing genuine hardship upon eligibility assessment.

• Request can be sent in myIE > Customer > I want to > Request Financial Relief

3. Explore Instalment Arrangements
Spreading repayments eases short-term cashflow pressure:

• Instalment plans can be set up directly in myIR under “Request instalment arrangement”
• Agree on regular payment amounts and dates to avoid enforcement triggers
• Early application often secures more favourable terms

Evaluate whether smaller, steady payments fit your budget better than lump-sum settlements.

4. Consider Penalty & Interest Remission
If late filing or payment wasn't entirely within your control, remission might reduce your bill:

• Section 183A allows remission for “reasonable cause”
• Section 183D covers interest remission where Inland Revenue advice was incorrect and the advice has directly resulted in the non-compliance. Other cases for interest remission may also be considered on their own merit
• Ensure all returns are up to date and tax already paid, remission won’t be considered otherwise
• For penalty remissions ensure the application states clearly who it is for, tax types and tax period for remission

A well-supported remission request can shave off significant costs.

5. Prepare Robust Documentation
Strong applications hinge on clear evidence:

• Bank statements covering the relevant period
• Loan applications or correspondence with financiers
• Cashflow forecasts, budgets and board minutes (for larger entities)
• Details of any external events or advice that impeded compliance

Organise these up front to accelerate Inland Revenue’s decision-making.

6. Anticipate Enforcement Actions
Non-engagement risks more than penalties:

• Visits to your premises and legal notices
• Section 17 gives IRD powers over wages and bank accounts
• Potential court proceedings and reputational damage

Treat reminders as urgent. Proactive engagement defers or prevents these measures.

7. Partner Early with Your Advisor
Your accountant or tax adviser can:

• Quantify your exact debt and forecast cashflow impact
• Draft instalment, remission or relief applications on your behalf
• Liaise with Inland Revenue to track progress and expedite outcomes

Engage them before final notices drop—early collaboration delivers the best mix of options.

Taking time now to assess your liability, gather proof, and request tailored support can transform an escalating debt into a manageable repayment plan. Don’t wait for enforcement letters—reach out today and secure the breathing room your business needs.