IRD continues to chase unpaid taxes in construction sector

Monday, 9 June 2025

Inland Revenue is currently auditing 127 construction companies as part of a crackdown on the construction sector.

Just over a year after Inland Revenue sent out a “last chance warning” to construction companies who had fallen behind in their tax obligations, its auditors have uncovered $6.6 million in additional tax.

Inland Revenue spokesperson Gay Cavill said the department was continuing its campaign to crack down on unpaid taxes across the sector.

“Inland Revenue has continued our targeted audit programme on construction customers who failed to comply with their income tax return filing and income reporting obligations, with 127 audits currently under way across the country.”

Since July, the department had completed 56 audits “delivering $6.6m in additional taxes assessed”.

“We are continuing our compliance work in this area.”

Inland Revenue had contacted 33,574 customers operating in the construction sector in 2025, Gay Cavill says.

She said the department was running the third iteration of its “Tax Toolbox” campaign, targeting the construction sector via advertising on social and digital media and broad reach advertising such as radio and outdoor adverts.

“For our 2025 campaign, we contacted 33,574 customers within the construction sector,” she said.

In 2024, the department contacted 38,380 customers in the sector.

In December, Cavill said the department had encouraged them to make a payment or set up instalment arrangements to pay debt.

“What we got was 24.16% of that group (9274) made lump sum payments totalling $38,855,281,” Cavill said at the time.

She said at that stage there were also arrangements in place for a further $50m to be paid.

Asked how much tax had been paid as a result of the work this year, Cavill said it was too early to say.

The number of construction companies put into liquidation in the year to April was up 48% on the previous year.

“As this campaign is still running, we are unable to report on the results at this time.”

Asked how many companies the department had sought to have liquidated, Cavill said she could not easily give a breakdown by sector but said action had been taken against 205 companies across the country between January and the end of May.

There were 671 more company liquidations in 2024 compared to 2023, up by a third.

Data provided by Centrix, a company that collected information on liquidations, showed 728 construction companies went into liquidation in the year to March, which accounted for 31% of all business liquidations.

As of April, that had climbed to 730, marking a 48% increase compared to the previous year. Across all sectors, 175 liquidations were recorded in April, an increase of 30% year-on-year.

Companies most commonly placed in liquidation in the past 12 months operated in the residential building construction sector (730), with property operators (292), hospitality operators (277) and road freight companies rounding out the list.

In South Canterbury, a Temuka-based construction and concrete business was put into liquidation in February.

In May, liquidators said chasing funds from the bankrupt shareholder of two Fairlie-based building companies, put into liquidation in April 2024, would be “fruitless”.

The same month the liquidator of a long-running Timaru kitchen business said the conduct of its director was being investigated as to whether the company had traded while insolvent.