How We Negotiated A Client’s IRD Tax Debt Down From $500K To $25K

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What is a statutory demandHave you been behind with your tax payments and need some direction to tidy up your returns?

At Smith and Partners we have had some recent success for our clients reduced tax payments with the Inland Revenue Department (“IRD”).

What was the situation?

We had a client who was in significant arrears with the IRD amounting to approximately $500,000. This particular client had three separate entities that had, due to unforeseen circumstances, failed to file annual tax returns for a number of years.

This client had:
1. A company;
2. A trust; and
3. Personal debt.

Our client came to us for advice as the IRD had served him with bankruptcy proceedings and his company with liquidation proceedings.

What did we do?
Firstly, we explained the consequences of the each proceeding to our client. Understanding the steps and the timelines in a legal proceeding can help reduce a client’s stress levels allowing them to approach the issue sensibly.

Secondly, we engaged an accountant that specialises in tax compliance to file tax returns for each legal entity to bring all the tax administration up to date. Although this was a significant task, it greatly assisted with our client’s ability to approach IRD to negotiate a settlement and to avoid bankruptcy.

Thirdly, after receiving advice from the accountant as to the correct amounts payable, we approached IRD with a settlement proposal (including an application for financial assistance).

What was the outcome?
The outcome was an astounding reduction in the tax payable by $475,000! Our client was also able to avoid bankruptcy and was required to pay a lump sum of $25,000 to resolve the matter entirely.

AND most importantly our client could move on with life free of the stress of having arrears with the IRD.

 A statutory demand isIf you would like further information in relation to negotiating a settlement with IRD to eliminate your tax problem please contact Wendy Alexander on (09) 837 6844 or by email at wendy.alexander@smithpartners.co.nz.

You may also be interested in reading:
What Happens When an IRD Dispute Is Referred to the Disputes Review Unit?
Inland Revenue Disputes: What Might Happen And What Can You Do?
What is bankruptcy?