Inland Revenue’s New Approach to Chasing Debt: What You Need to Know

Inland Revenue (IR) has strengthened its approach to managing overdue tax, and it’s more important than ever for businesses to stay ahead of their obligations. As at June 2025, New Zealand’s total tax debt reached $9.3 billion, prompting IR to invest heavily in new systems, increased staffing, and targeted compliance activity.

For business owners, this means faster follow-ups, earlier intervention, and more active pursuit of unpaid tax.

IR is now using enhanced data and technology to identify at-risk taxpayers sooner. Rather than waiting until debts grow, IR is contacting businesses earlier and escalating non-responsive cases more quickly. This includes greater use of automated reminders, payment demands, deductions, and—where necessary—legal action.  IR are opening talking at conferences about the capability of their software, including that they have had to turn off some parts due to the volume of counter responses by taxpayers through their call centre.  They are building the technology to refine the impact on their call centre.

Sectors with inconsistent compliance, cash-based activity, or property transactions may experience more frequent reviews.

A key shift is IR’s focus on engagement. Businesses that communicate early—before missing payments—are far more likely to secure manageable instalment plans or relief from penalties and interest. Conversely, businesses that ignore IR’s attempts to make contact are now moved to enforcement stages faster than in previous years.

If you haven’t filed a return on time, you will find a default notice to remind you of a notional payment obligation to get you to take action and file that return.

Hardship assistance remains available, but IR is applying tighter scrutiny. If a business seeks write-off or relief, IR now expects full financial disclosure and evidence that all reasonable payment options have been exhausted.

For our clients, the message is simple:If you anticipate difficulty paying tax, talk to us early. We can help negotiate instalment arrangements, review cash-flow options, or explore relief pathways before the situation escalates.

Being proactive is the best way to avoid unnecessary penalties, stress, or disruption to your business. If you’re unsure where you stand—or want a review of your current tax position—reach out to the team at Business Studio Innovators anytime.