It said not paying tax “creates an unfair advantage over businesses that are doing the right thing and affects the revenue needed to fund public services”.
Lighthouse Financial managing director Matthew Harris said the company had seen a huge increase in enforcement, ranging from “simple phone calls to taking money out of the business bank account and on the very extreme side, tipping businesses into liquidation”.
IR said businesses needed to talk to the department early if they weren’t able to pay, ideally before the due date.
“The key thing is to engage, keep filing, and make sure ongoing obligations are met.
“PAYE is especially important. Employers are deducting money from employees’ wages and must pass that on to Inland Revenue by the due date. Failing to do so is serious and can result in significant penalties, and in the most serious cases prosecution.”
Harris said business owners could arrange to pay tax off in instalments and may be able to negotiate remissions in interest and penalties to ensure they continue trading.
“There are arrangements that can be made, rather than sticking your head in the sand and having Inland Revenue come to you and ending up in a far worse position,” he said.
“Before [IR] take money out of your account, there’s a lot of things a business owner can do to avoid that happening. Usually when they take money, they’ll empty the bank account, which will leave the business in a pretty precarious position.”
Baker Tilly Staples Rodway accounting firm tax director Andrew Dickeson said the agency had shifted its focus from helping businesses access support to ensuring they met their tax obligations.
BWA Insolvency principal Bryan Williams said it was “only a matter of time” before IR began to demand the money it was owed.
Centrix data shows company liquidations rose 17% in the year to April, because of the increased IR enforcement, a slowdown in construction and a string of closures in hospitality.
McDonald Vague said while IR wind-up applications had declined in May, total applications had reached a new high for this time of year because of a rise in applications by other creditors.
Michael Sergel is Newstalk ZB’s business reporter, covering the daily life of business and the business of daily life. He’s been covering business, politics, local government and consumer affairs for over a decade.