If your business owes IRD money, I’ve got some bad news.
Budget 2026 has just given Inland Revenue another $15 million a year to strengthen compliance and debt collection activities.
And the Government expects that investment to generate roughly $3 of additional tax revenue for every $1 spent.
That’s a pretty clear sign of where the focus is heading.
The Government wants IRD collecting more of the tax that’s already owed.
So if your business has overdue GST, PAYE, Income Tax or Provisional Tax, now is not the time to bury your head in the sand.
Here’s what I’d recommend business owners do immediately.
1. Find Out Exactly What You Owe
You can’t solve a problem you haven’t measured.
One of the first things I recommend is logging into myIR and reviewing your position.
Look at:
- GST balances
- PAYE balances
- Income tax balances
- Provisional tax obligations
- Interest and penalties
Many business owners know they owe IRD money.
Far fewer know exactly how much.
Start there.
2. Make Sure All Your Tax Returns Are Filed
This is one of the biggest mistakes I see.
Some business owners avoid filing because they can’t afford to pay.
That’s usually the wrong approach.
In many cases, filing the return and dealing with the payment issue separately puts you in a better position than failing to file altogether.
Even if you can’t pay immediately, keeping your filing obligations up to date demonstrates that you’re engaging with the process.
3. Don’t Ignore Letters, Emails or Phone Calls from IRD
Ignoring IRD rarely makes things better. In fact, it often makes things worse.
Many business owners tell themselves: “I’ll deal with it next month.”
Then next month becomes six months. Then six months becomes two years.
If IRD contacts you, respond. Even if you don’t have an immediate solution, communication is usually better than silence.
4. Consider a Payment Arrangement
If you genuinely can’t pay the full amount immediately, a payment arrangement may be an option.
The key word is “early”.
It’s generally much easier to discuss repayment options before the situation becomes critical.
Waiting until enforcement action begins limits your options.
If cashflow is tight, have the conversation sooner rather than later.
5. Get Your Cashflow Under Control
Tax debt is often a symptom rather than the real problem.
The real problem is usually cashflow.
Ask yourself:
- Are you setting aside GST?
- Are you budgeting for provisional tax?
- Are you paying yourself before paying your tax obligations?
- Are you regularly reviewing cashflow forecasts?
Many businesses don’t have a tax problem.
They have a cashflow management problem.
Fixing the underlying issue is often more important than dealing with the debt itself.
You can sometimes easily unlock significant cashflow in your business with some simple fixes.
6. Act Early
One of the biggest mistakes business owners make is waiting too long.
Tax debt problems rarely solve themselves.
Interest continues to accrue, penalties may apply, and the longer the issue remains unresolved, the fewer options you may have.
The earlier you take action, the easier it usually is to get the situation under control.
7. Talk to Your Accountant
Many business owners wait too long before asking for help.
By the time they speak to their accountant, the debt has grown, penalties have accumulated and the available options are often more limited.
A good accountant can help you:
- Understand exactly what you owe
- Review your cashflow position
- Identify the underlying cause of the debt
- Discuss repayment options
- Help communicate with IRD where appropriate
- Put systems in place to prevent the problem from happening again
The earlier you have the conversation, the more options you usually have.
Remember, most tax debt problems don’t appear overnight.
They build up over time.
And in many cases, they can be addressed before they become a much bigger issue.
My Thoughts
The Government has made its intentions clear.
It wants IRD collecting more of the tax that’s already owed.
If you owe GST, PAYE, Income Tax or Provisional Tax, now is a good time to understand your position, engage with IRD and take action before the problem becomes bigger.
Ignoring tax debt has never been a great strategy. Budget 2026 suggests it’s about to become an even worse one.
If you need help dealing with IRD debt or understanding your options, reach out for a confidential discussion.