It was recently announced that the Government has experienced a $1.6 billion shortfall in tax revenues compared to forecast. We think it is unlikely to be a coincidence therefore that while tax revenues are down the IRD is taking a much tougher stance towards writing off interest, penalties and outstanding tax.
In the past the IRD have been prepared to write off outstanding amounts. Currently we notice that they are insisting that payments be made in full including interest and penalties.
The only certain way to ensure that IRD interest and penalties are not levied is to make sure that all tax obligations are paid on time.
The IRD now charges late payment interest at 8.40%pa on overdue tax. In addition it charges late payment penalties on overdue amounts on the following basis:
- a 1% penalty is levied the day after payment was due
- a further 4% penalty is applied 7 days after payment falls due
- thereafter a monthly penalty of 1% is applied until payment is made in full.
If you are not able to pay your tax obligations on time these options available to minimise IRD interest and penalties:
- approaching IRD about an instalment arrangement
- using a tax pooling agent
- securing tax financing.
Contact your UHY Haines Norton representative if you are unable to meet your tax obligations and would like to discuss these options.