01
Blog
01
Blog
Published: 30 April 2025
Last Updated: 18 August 2026
Categories
If you cannot afford to pay tax, you will need to settle on an agreement with IRD before they try to obtain judgement against you. An agreement can be arranged by applying for financial relief where IRD writes off penalties or an agreed amount, or negotiating instalment arrangements of monthly, weekly, or fortnightly payments. However, the IRD may reject unsatisfactory tax debt repayment applications.
In the case of a company, it risks going insolvent and being liquidated to cover the tax payments if you cannot secure an instalment arrangement or financial relief. In certain circumstances—if you are a shareholder holding a personal guarantee, for example—non-compliance with tax payments may eventually lead to your personal bankruptcy.
Thus, it is essential to know how to create a proposal that is both realistic for your foreseeable tax liability and considerately represents your situation to the IRD.
Learn the process our experts use to help clients apply for financial relief and instalment arrangements.
The most common way businesses negotiate with the IRD is not necessarily the most effective approach.
Typically, we see directors make a proposal and simply state that they can’t pay what they owe, the balance they can pay and how much time they need to pay. It’s generally concise and usually fits on a page. However, we often see those proposals getting rejected.
The best way to negotiate with the IRD and work towards financial relief is to humanise your company’s situation. The people inside the IRD have empathy, and although they must abide by tax laws, they also want to understand the circumstances.
The IRD has a legal duty to recover unpaid taxes, but they also consider specific circumstances like financial hardship, insolvency, or whether a business is in liquidation.
They may agree to an instalment arrangement if you provide a clear, well-documented proposal that shows willingness and capacity to pay. If the proposal is accepted, IRD may offer financial relief by reducing late payment penalties and interest.
If it’s rejected, formal demands and enforcement actions may follow, including asset seizure or liquidation. Open communication and professional advice are key to reaching a manageable outcome.
At Norling Law, we take a deep dive into our commercial clients’ situations to understand what’s going on in both their professional and personal lives in order to understand why they don’t have the money to pay the IRD.
If you owe money to the IRD, proactively deal with it; the IRD is enforcing tax debts at a huge pace right now, with the highest liquidation rates in 10 years, driven by the IRD’s statutory demand for liquidation. Now is the time to proactively communicate.
Don’t take comfort in the silence you may have received because when they decide to take action, it will move very quickly.
If you have questions, concerns or would like advice on how to manage or repay debt to the IRD, book a 30-minute consultation with our team.
02
Author Profile
Brent is the Director of Norling Law. He has a wealth of experience in the District Court, High Court, Court of Appeal and Supreme Court. Brent is passionate about negotiating favourable outcomes for his clients and able to implement this in his daily negotiations.
03
Related Articles
Book a free consultation to get clarity on your options and next steps
We’ve been guiding people through times of uncertainty since 2015. Talk to us for free to see what we can do for you.
