Kiwi Edition have learned that the Inland Revenue Department (IRD) can now share information about significant unpaid IRD debt (tax debt) with a credit reporting agency (currently Centrix).
If this happens, it could affect your business credit rating and make borrowing or securing finance in the future harder. This only applies in more serious cases, generally where the following criteria must be met:
- The business was ‘formally notified’ 30 days before it was credit reported, and
- The debt is over $150,000 or has been unpaid for a year, and
- Equals 30% or more of the company’s assessable income, and
- The IRD have made ‘reasonable efforts’ to collect the debt.
The IRD have advised that they are already trialling a process where businesses will first receive a Notice of Intent through their myIR account and also sent by courier. From there, businesses have 30 days to respond and either paying the debt owed or setting up a repayment arrangement can often prevent credit reporting about the tax debt.
The 30-day response period starts from the date the notification is delivered to the registered office, but remember that the address for the companies registered office may be an accountant or solicitor whom set up the company or who acts for you. The IRD say that this ‘formal notification’ to the company is now sufficient and that means that not all individual directors will be notified.
Refinance Unpaid IRD Debt
There have always been some good reasons why you should get a tax debt loan and have any overdue tax cleared up, but this is probably one of the best reasons to get onto this as soon as you can.
Stuart Wills is a finance specialist that does a lot of tax debt finance as well as general business finance and home loans too.
Tackling tax debt is no small feat, but with the right approach and resources, it’s entirely possible.
Whether you’re considering IRD repayment plans, exploring tax debt loans, or negotiating for debt relief, each option offers a pathway to financial stability and of course means that your business credit rating is protected.
Remember, the key is to act promptly and seek professional advice when needed.
Negotiating with the IRD for Debt Relief
The IRD provides opportunities for businesses to negotiate debt relief under specific circumstances.
Engaging with the IRD early can also demonstrate your willingness to resolve tax debt issues proactively, which can work in your favour. When you approach the IRD with a plan, you’re not just seeking relief but you are showing that you respect your financial responsibility and compliance plus these actions can help avoid having your unpaid IRD debt affect your business credit rating.
Professional representation with someone who is a specialist in tax law can enhance your negotiation efforts with the IRD. These experts bring to the table an understanding of the intricacies involved, allowing them to navigate the discussions effectively. They know the rules that the IRD have and can help present your case in a way that highlights your financial situation and the need for relief, increasing your chances of success.
Successful negotiation with the IRD can result in reduced penalties and/or interest charges on your tax debt.
Putting Business Finance In Place Too
When you are arranging lending for any unpaid IRD debt you should also be reviewing your cashflow and therefore your ability to manage future IRD obligations.
Having the right finance in place allows you not only to manage your tax but to manage your cashflow and to allow you to focus on grow your business.
Finance is the most cost effective way to fund business growth, but only when you have the right finance in place.
