IRD to target 40,000 businesses over taxes

IRD says it is owed close to $900 million by those in the construction sector. File photo
IRD says it is owed close to $900 million by those in the construction sector. File photo
Inland Revenue is giving those in the construction industry a last chance warning to pay their taxes or it will identify them and take action.

Inland Revenue says it is owed close to $900 million by those in the construction sector, which represents about a sixth of the total outstanding tax debt.

IRD spokesperson Richard Philp said they planned to target about 40,000 individual businesses with a campaign.

"That's not the entire population but a reasonable level of the total outstanding companies and individuals that are associated with construction industry."

The 40,000 being targeted would represent businesses with a number of unfiled returns, as well as some who had past tax debt they needed to address, he said.

It was an issue of fairness, he said.

"When businesses operate in an insolvent manner it's not fair on those that actually do comply so we try to level the playing field where that makes sense."

At the point where businesses have ignored all IRD contacts including reminders and monthly statements of account then IRD must contact them directly "to try and get an understanding of their circumstance", Philp said.

"We did a lot of work supporting those businesses through those Covid times but it's time now for those businesses that do owe money to get on with it."

Penalty rates on unpaid tax debts may be progressive, he said.

"So basically a 1 percent entry point and then growth of 4 percent over a period of time, so the penalties quickly rack up ... so it can be an expensive loan if you're not getting on top of it."

Recent IRD surveying has indicated there is more acceptance around cash jobs - IRD can use other parties such as bank accounts or electronic payment service providers to identify that work has been done and payments have been made, he said.

"So that can tell us a little more about the truth of someone's position."

In some cases people just fail to file tax a return, he said.

"So we can see that transactions have been occurring and they need to file but they don't."

IRD receives about 7000 tips a year about people taking cash jobs.

A good percentage of the anonymous tips IRD received were linked to the construction industry, he said.