‘Cut your excuses’: Inland Revenue issues tax warning to construction companies
Tuesday, 9 April 2024
After taking a “softly, softly” approach during the Covid pandemic, Inland Revenue is now talking tough on the construction sector’s tax obligations.
Tax debt is high in the sector and data shows under-declaring income, often via cash jobs, is common.
40,000 construction companies with outstanding debt, overdue tax returns, or both, will hear from IR in the coming months.
Inland Revenue (IR) is warning construction companies to sort their taxes out or face enforcement action which could lead to prison time.
In a “last chance warning” on Tuesday, IR told businesses and sole traders in the sector to “cut your excuses and pay your tax.”
“We’re not blind to the fact that businesses in the construction sector have struggled with increases in the cost and availability of materials, and labour shortages over the last few years,” IR’s Richard Philp said.
“But we also know that while some are struggling just to keep up with the everyday grind, others are actively avoiding their tax obligations.”
Tax debt was high in the construction sector and IR data showed that under-declaring income, often via cash jobs, was commonplace.
“Each year across all sectors, we get nearly 7000 anonymous tip-offs about cash jobs and the like,” Philp said.
“Construction is the industry most often anonymously reported to Inland Revenue. That shows a level of concern by New Zealanders and their belief that paying the correct amount of tax is the right thing to do.”
IR had taken a “softly, softly” approach across the board during the Covid-19 pandemic years but that’ had now changed, Philp said.
“We ran a campaign last year to help construction business do the right thing and now we’re taking an even firmer approach.
“The message is cut the excuses, ask us for help if you need it, and don’t stick your head in the sand or you could find yourself talking to someone from our audit team, or worse still, staring down a prison sentence as several people in other sectors have this year.”
Emails and letters would be sent to 40,000 construction companies with outstanding debt, overdue tax returns, or both, in the coming months.
About 2500 of those would also receive a text offering support to get their outstanding tax sorted, and compliance officers would contact those who accepted the offer.
“Our compliance officers will also be doing site visits in high construction areas in key locations across New Zealand,” Philp said.
“Our audit team will also be looking to select a number of customers to follow up and investigate.
“Do the right thing and get your outstanding debt and returns sorted now.”