Behind on GST or PAYE? You’re not alone — and you have more options than you think.

Tax debt is one of the most common pressures facing New Zealand small and medium businesses. GST comes due every two months. PAYE is due every pay cycle. When cash flow tightens — whether from a slow season, a difficult client, or rising costs — it doesn’t take long before arrears start to mount.

The good news is that Inland Revenue (IRD) does work with businesses that engage proactively. The challenge is knowing how to approach it, what IRD actually needs to see, and what your obligations are as a director while that debt sits unpaid.

That’s where Fixity comes in. Led by Director Larissa Logan, a Licensed Insolvency Practitioner and Fellow Chartered Accountant with over 20 years’ experience in turnaround and restructuring, Fixity has helped many New Zealand businesses navigate IRD debt — and come out the other side.

Why GST and PAYE Debt Is Different to Other Business Debt

Not all debt is treated equally under New Zealand law. GST and PAYE are classified as preferential creditors under the Companies Act 1993 — meaning they sit at the front of the queue if your company goes into liquidation.

More importantly, PAYE is money deducted from your employees’ wages on behalf of the Crown. Failing to remit it to IRD is treated seriously — both by Inland Revenue and by the courts. Directors can face personal liability if PAYE arrears are not managed appropriately.

Key facts NZ business owners need to know:

• IRD charges interest on unpaid tax debt — currently at a rate that compounds quickly.
• Late payment penalties apply from the day payment is missed, and can add 1–4% to your balance.
• IRD can issue a statutory demand for debts over $1,000 — which, if unpaid, can lead to an application to wind up your company.
• Directors have duties under the Companies Act 1993 to act in the interests of creditors once a company may be insolvent — IRD debt can trigger this threshold.
• GST and PAYE obligations continue to accrue even while you are negotiating — staying current on new obligations is critical.

What Is an IRD Instalment Arrangement?

An instalment arrangement (sometimes called a payment plan) is a formal agreement with IRD to pay off outstanding tax debt in regular instalments over an agreed period. IRD will generally consider an arrangement if:

• You are currently filing all your returns on time (or are actively catching up).
• You are meeting your ongoing obligations — new GST and PAYE must be paid as they fall due.
• You can demonstrate a genuine ability to repay the arrears over a realistic timeframe.
• You engage promptly and honestly with IRD.

IRD’s priority is recovery of the debt — not necessarily winding up your company. But they will take enforcement action if they believe a business is not viable, or if a director is simply buying time without any genuine plan to repay.

This is where professional advice makes a real difference. A well-structured approach to IRD — with a credible cash flow forecast, a realistic repayment proposal, and a clear narrative about the business’s position — significantly improves the chances of an acceptable arrangement.

How Fixity Helps With IRD Payment Negotiations

Fixity works alongside business owners and their accountants to assess the situation, prepare a credible proposal, and negotiate directly with IRD. Our process typically involves:

• Initial assessment of your current tax position, arrears, and ongoing obligations.
• Review of your business’s cash flow and viability — to ensure any arrangement is one you can actually meet.
• Preparation of financial information IRD requires, including a 13-week cash flow forecast where appropriate.
• Structuring a repayment proposal that is realistic for your business, while credible to IRD.
• Liaising with IRD on your behalf to negotiate terms and respond to any queries.
• Ongoing support to ensure you stay on track — because breaching an instalment arrangement can have serious consequences.

We also provide an honest assessment of your options. Sometimes an IRD payment plan is the right path. Other times, a broader restructuring, voluntary administration, or — where the business is no longer viable — a managed liquidation, may be in your and your creditors’ best interests. We will always give you a straight answer.

What Directors Need to Know: Your Legal Obligations

Directors of New Zealand companies have obligations under the Companies Act 1993 that become particularly important when a company is in financial difficulty. These include the duty to act in good faith, the duty not to trade recklessly, and the duty to consider the interests of creditors when the company may be insolvent.

Ignoring IRD debt, or continuing to accrue PAYE arrears without addressing them, can expose directors to personal liability. This is not something to leave unaddressed.

The earlier you seek advice, the more options you have. Early intervention is almost always better — for the business, for your employees, and for your own position as a director.

Frequently Asked Questions

Can I negotiate a payment plan directly with IRD myself?

Yes, you can contact IRD directly. However, the structure and credibility of your proposal matters significantly. IRD will want to see evidence that you can meet ongoing obligations and repay arrears — and a poorly prepared approach can result in an arrangement being declined or onerous conditions being imposed. Professional advice often results in better terms and reduces the risk of getting it wrong.

What happens if IRD declines my payment plan request?

If IRD declines an arrangement, they may escalate to enforcement — which can include various steps including an application to wind up your company. If this happens, it is important to act quickly. You may still have options, including voluntary administration or voluntary liquidation, which can be managed in a way that is better for all parties than a court-ordered liquidation.

What if my business has received a statutory demand from IRD?

A statutory demand is a serious step. You generally have 15 working days to respond — either by paying the debt, reaching an agreement with IRD, or applying to the court to set the demand aside. If you have received a statutory demand, contact us immediately. Time is critical.

Will IRD write off any of my debt?

In limited circumstances, IRD may write off penalties and interest — particularly where a taxpayer engages proactively and can demonstrate genuine hardship or an inability to pay the full amount. Writing off core tax (the GST or PAYE itself) is much less common. We will give you a realistic view of what is achievable in your situation.

My accountant has been managing this — do I still need specialist advice?

Your accountant plays an important role, and we work alongside them — not instead of them. Where IRD debt has become significant, or where there are broader questions about the business’s viability and your obligations as a director, specialist insolvency and restructuring advice adds an important layer. We are happy to work collaboratively with your existing advisors.

How much does it cost to get Fixity’s help?

We offer a free initial consultation to understand your situation and outline your options. From there, our fees depend on the complexity of the engagement. We are transparent about costs upfront — there are no surprises.

Get a Free Confidential Consultation

If your business is carrying IRD debt — whether you’ve just missed a payment or you’ve been managing arrears for months — the best thing you can do is get clear advice early.

Fixity offers a free, confidential initial consultation. We will listen, assess your situation, and give you an honest view of your options. No jargon, no judgment — just practical advice from people who have seen it all before.

Call us on 0800 FIXITY (0800 349 489) or email info@fixity.co.nz

We work with businesses throughout New Zealand, including Auckland, Wellington, Christchurch, and nationwide.