Inland Revenue’s power to negotiate instalment payment of tax arrears is not available as of right for delinquent taxpayers with a track record of poor compliance, the High Court ruled. Integrity of the tax system is paramount. Voluntary compliance with tax obligations by other taxpayers is threatened if concessions are seen to be unfair, arbitrary and a reward for past non-compliance, Justice Andrew said.
The High Court was told of lengthy dealings with Inland Revenue by Roshan Anthony and his Auckland business, Summit Scaffold NZ Ltd.
Back in 2018, Inland Revenue first sought to liquidate Summit for unpaid taxes.
Legal proceedings were discontinued after Inland Revenue agreed payment by instalments. Within months, Summit defaulted on this agreement.
A further High Court liquidation application in 2021 by Inland Revenue was also halted after Summit made part-payment of arrears, with Inland Revenue agreeing to write off accrued penalties and interest.
One year later, Summit failed to file tax returns.
In May 2024, Inland Revenue again filed for liquidation of Summit Scaffold claiming unpaid GST, PAYE and income tax totalling nearly $400,000.
Hearing of this liquidation application was put on hold, while Summit challenged Inland Revenue’s dismissal of its multiple further requests for payment by instalments.
Evidence was given of Inland Revenue concerns over the level of borrowings taken out of the company by Mr Anthony and steps he had taken to transfer property out of his name into the name of his spouse.
Inland Revenue told the court Mr Anthony was taking cash out of his company at a time when there was sufficient available for Summit to meet tax debts. Mr Anthony declined Inland Revenue’s suggestion that an instalment plan might be approved if mortgage security were given over property recently transferred to his spouse.
Seeking High Court judicial review of Inland Revenue’s refusals, Mr Anthony and Summit Scaffold claimed there was a failure to properly apply discretionary powers in the Tax Administration Act.
The Act does not require Inland Revenue to accept each and every instalment proposal solely on the basis this would achieve a better recovery than putting that taxpayer into bankruptcy or liquidation, Justice Andrew said.
Decisions about individual taxpayers must be balanced against broader public interest considerations.
Separately, a March 2024 District Court default judgment held Mr Anthony liable to Inland Revenue for income tax of some $180,000 unpaid for tax years 2019 – 2023.
Inland Revenue subsequently accepted his proposal to pay this debt in full by instalments over two months. The High Court was told this personal tax debt has been paid in full.
Mr Anthony’s request that the earlier District Court default judgment now be set aside was refused. Inland Revenue acted reasonably and in compliance with the law in taking legal action against Mr Anthony to force recovery of tax due, Justice Andrew ruled.
Anthony & Summit Scaffold NZ Ltd v. Inland Revenue – High Court (30.05.25)
25.126