Inland Revenue's Increasing Focus on Compliance and Debt Recovery: Is Your Business Ready?

Additional funding was allocated to Inland Revenue in Budget 2026 to support compliance, review and debt management activities. At the same time, tax policy has once again become a prominent topic of political discussion.

Regardless of the outcome of future policy debates, we expect that Inland Revenue will continue investing in initiatives aimed at improving compliance, supporting revenue collection and assisting taxpayers to meet their obligations. Against this backdrop, many businesses will have already noticed an increase in Inland Revenue reviews, information requests, debt management activity and audit enquiries over the past 12 to 18 months, if not longer.

While Inland Revenue has always played an important role in maintaining the integrity of New Zealand's tax system, recent developments suggest that tax administration and revenue collection remain key areas of focus for the Government.

Why compliance and revenue collection remain in focus 

Earlier this year, Inland Revenue published its Long-term Insights Briefing, which explored the challenges and opportunities facing New Zealand's tax system over the coming decades. Among the key themes identified were the fiscal pressures associated with an ageing population, increasing demands on public services and the need to maintain a sustainable revenue base. While long-term tax policy reform may take years to develop, enhanced compliance activity and improved revenue collection represent practical short to medium-term measures available to Government in responding to these pressures.

Areas attracting Inland Revenue attention 

Areas receiving ongoing attention include PAYE, GST, property transactions, shareholder current accounts, related-party arrangements and certain income tax positions that may have historically attracted less scrutiny. Inland Revenue's continuing investment in data analytics and information matching capabilities has also enhanced its ability to identify anomalies and better understand taxpayer behaviour across different industries and sectors.

Reviews often begin with routine enquiries 

It is important to recognise that Inland Revenue activity is not limited to formal audits. Many engagements begin with relatively routine information requests or review exercises. In some cases, these matters are resolved quickly. In others, Inland Revenue may seek further information to better understand particular transactions or tax positions. As such, businesses should ensure Inland Revenue correspondence is addressed promptly and that supporting documentation is maintained in good order.

good order.

Take the initiative to strengthen your business’ tax governance 

The current environment presents a valuable opportunity for businesses to review their tax governance processes and historical tax positions. In our experience, many tax issues arise not because of deliberate non-compliance, but due to system limitations, historical practices, documentation gaps, staff turnover or the increasing complexity of tax legislation. Identifying these issues early can often prevent more significant challenges later.

Correcting historical errors and managing tax debt 

Where errors or omissions are identified, making a voluntary disclosure provide an effective pathway to correct historical positions while reducing potential penalties. Similarly, where tax debt exists, engaging with Inland Revenue early will generally provide a wider range of options. Depending on the circumstances, these may include instalment arrangements, payment proposals, remission requests or applications under Inland Revenue's serious hardship provisions. For businesses carrying historical tax debt, incorporating tax obligations into cashflow forecasting and working capital management can often be one of the most effective ways to manage exposure and improve financial certainty.

It’s not all about tax technical, approach matters 

Another trend we continue to observe is the ongoing evolution within Inland Revenue itself. Significant organisational change, recruitment activity and personnel movements mean taxpayers are increasingly engaging with officers from a wide range of professional backgrounds and experience levels. As a result, review approaches, communication styles and expectations can vary considerably between cases.

Navigating an Inland Revenue engagement is therefore not solely a technical tax exercise. Understanding what information Inland Revenue is seeking, the underlying rationale behind the questions being asked, how information should be presented, and how to communicate effectively throughout the process can often be just as important as the underlying tax analysis. In many cases, a constructive and well-managed process can make a significant difference to both the outcome and the experience.

Be audit-ready before an enquiry begins 

Importantly, professional support is not only valuable once Inland Revenue has commenced a review or audit. Inland Revenue enquiries can arise for many reasons, including industry-wide review projects, policy-driven focus areas, data analytics initiatives, specific transaction types or routine sampling exercises. A proactive tax risk review can therefore be a worthwhile exercise, helping businesses become audit-ready by identifying areas where compliance processes may be strengthened, highlighting transactions that may warrant further review, and recommending practical improvements before issues arise.

The key takeaway 

Proactive tax risk management almost always delivers better outcomes than simply reacting when you get a ‘please explain’ request from Inland Revenue. Whether the issue relates to historical tax positions, existing tax debt or broader compliance processes, taking the time to review and address matters early can provide greater certainty, reduce potential risks and give business owners greater peace of mind in an increasingly complex tax environment.

We’re here to help

At Andersen, we have extensive experience assisting clients with Inland Revenue reviews, audits, debt management matters and voluntary disclosures. We regularly help businesses assess tax governance processes, prepare for Inland Revenue enquiries, respond to information requests and navigate compliance challenges while continuing to meet their day-to-day business obligations. Our focus is on delivering practical and commercially sensible solutions, minimising disruption and providing clients with confidence that their tax affairs are being managed appropriately.

Talk to our tax specialists

Contact us