Tax crack-down: IRD targets credit scores of stubborn debtors
Thursday, 27 November 2025
Inland Revenue Te Tari Taake is deploying new tactics to bring down spiralling tax debt, with the veil of secrecy protecting tax debtors about to get thinner.
Following a successful pilot project, the Inland Revenue will report more recalcitrant tax debtors to credit reporting agency Centrix.
Businesses and lenders often check company credit reports compiled by Centrix to decide whether to give credit, or do business, with a company, but currently tax debt is only reported in a very small number of cases to Centrix by Inland Revenue and so is only shown on a small number of reports.
Lisa Barrett, deputy commissioner for customer and compliance services business at Inland Revenue, told accountants and tax advisers last week: “We’ve done a pilot of 30 customers who were advised in early November that they would be credit reported, if they did not respond within 30 days.
Read more:
“We intend to ramp this credit reporting up over coming months and in time, it will result in us reporting hundreds of businesses, rather than the few we currently do,” she said at the Chartered Accountants Australia New Zealand conference.
Centrix, and tax advisers, have been urging Inland Revenue to follow Australia’s example of using public reporting as a disincentive for businesses not to meet their GST, PAYE and other tax obligations.
Keith McLaughlin, managing director of Centrix, said companies with significant tax debt posed a risk to other companies and could create a domino effect, taking down other businesses when they eventually failed.
Inland Revenue has become concerned at rising tax debt that has spiralled up from less than 6% of tax revenue to more than 8% in just three years, with Barrett saying there appeared to be several reasons.
The first was that debt write-offs hadn’t been keeping pace with rising tax debt, but she also feared the decision by the Inland Revenue not to chase debt aggressively during the Covid pandemic had led some people to think they can ignore their debt.
And, she said: “The other reason … is, quite simply, that more people are choosing not to pay their tax. We don’t entirely know why that is. This could be because of the economic cycle, and the pressure that has put on people with cost of living.”
But, she said: “Alternatively, it could have something to do with the polarisation of society and decline in trust in Government.”
The Government has given Inland Revenue extra funding to chase tax debt, expecting to get back $8 in tax debt paid for every $1 it invests.
And Barrett explained some of the systems Inland Revenue was using to catch tax dodgers, including errant landlords and property speculators.
The tax department was now alerted by Land Information New Zealand every time a property changed hands.
Barrett said this allowed Inland Revenue to follow up with sellers if it didn’t see the transaction declared in their next GST or income return.
“Our system then automatically matches up the information and sends out leads to our people wherever it spots a likely problem,” she said.
“Within days of a sale happening that is linked to a developer, we're in touch with them to let them know how much we're looking forward to seeing that sale in their next return.”
She put up a slide of audits closed in the past year relating to property showing nearly $230 million of tax discrepancies.
These included $102m in unpaid GST on property transactions, $11m of undeclared rental income by 485 landlords, and $22m of quick-flick sales caught under the Brightline Test law for 344 investors.
Last year, Inland Revenue completed more than 6000 audits, a 40% increase on the year before, and it found more than $1 billion in discrepancies, Barrett said.
“This year we’ve continued to accelerate our efforts in the compliance space. We’ve completed around 20% more audits in the first quarter this year than last, and we’ve found around 60% more discrepancies.”
She had this message for those not paying their tax: “At its most basic level tax funds the things needed to protect business property rights. Our justice system, police, military and basic regulation. Without these things there is no ability to run a business. If we didn’t have a justice system, police etc, your property would belong to whoever had more power than you.”