Tax agency ‘missing out on millions’
Inland Revenue has let millions of dollars of tax revenue slip through its fingers by weakening its grip on the ‘‘hidden economy’’, National Party revenue spokesman Andrew Bayly says.
The number of staff working on tax investigations has fallen by more than quarter to 143 since
2016, according to figures provided to Bayly by the department.
The amount of tax recouped from investigations fell by almost a third, from $152 million in
2015-16 to $108m last year, he said. Bayly blamed the workload created by Inland Revenue’s Business Transformation project, saying the department had taken its ‘‘eye off the ball’’.
‘‘The third stage of the upgrade rolled out in April has led to a huge number of inquiries as people have sought to clarify their personal tax affairs.
‘‘As a result, staff have been diverted from other areas IRD should be policing, including the hidden economy,’’ he said.
Bayly said Inland Revenue’s figures showed it completed 453 investigations and 10 prosecutions for infringements between March and September.
‘‘That compares with 1165 investigations and 27 prosecutions completed under National in the seven months to September
2017,’’ he said. ‘‘IRD has been so focused on dealing with problems created after it introduced the third stage of its Business Transformation computer upgrade in April that it is actually costing the country money.’’
The number of prosecutions was now very low, Bayly said.
‘‘IRD is certainly not producing the results you would expect.’’
Inland Revenue spokeswoman Gay Cavill confirmed the department had devoted as many staff as possible ‘‘including some staff who would normally undertake compliance work’’ to handling customer queries.
That was before and after it completed the third stage of its Business Transformation programme in April, she said.
‘‘We are taking a ‘right from the start’ approach to compliance, and supporting customers as they get used to the largest change to the tax system in 20 years has been top priority.’’
Inland Revenue Commissioner Naomi Ferguson told Parliament’s finance and expenditure select committee in November that not all the tax compliance work was about investigations. ‘‘We will continue to work with customers and with [tax] agents to correct affairs.
‘‘We do not count those as full investigations.’’
As an example, Inland Revenue had stopped $21m being paid out in incorrect refunds for charitable donations so far that year, she said. ‘‘Those were not investigations but it is real compliance work – just done a different way.’’