IRD debt help: every route on one page

When you owe IRD, the internet is full of people who’d like to help, for a fee. Some are lenders, some are negotiators, some are insolvency firms. Each tends to talk mostly about the route that pays them. This page lays out every route side by side, including the ones that earn us nothing, so you can see the whole map before you choose.

What are the main routes for IRD debt?

Route	What it is	Suits	Main catch
Pay from your own funds	Clear the balance from cash or an asset sale	Anyone who has the money	Can strip working capital
Instalment arrangement	A formal payment plan agreed with IRD	Moderate debts, steady cash flow	Interest keeps running; penalties can come back if it breaks
Relief and hardship	IRD writes off or reduces some debt	Individuals in serious hardship; narrow cases for companies	Companies can’t use serious hardship
Penalty remission	IRD removes penalties for a good reason	A genuine event beyond your control	Doesn’t touch the tax itself
Tax pooling	Buy date-stamped tax from an intermediary	Provisional and terminal income tax timing	Not for every tax or every debt
Borrowing (loans to pay IRD)	A loan pays IRD in full	Viable businesses with property or steady turnover	Loan cost; security if secured
Insolvency advice	Licensed practitioner, formal process	Businesses that can’t continue	Fees, investigations, and lasting consequences

Where should most businesses start?

With IRD itself. That may sound odd coming from a lender, but it’s the honest answer. IRD’s position is that if you have tax debt you can’t pay, it wants to talk (IRD). Applying for an instalment arrangement in myIR costs nothing, and for many smaller debts it’s enough.

Where IRD’s own options run out, or don’t fit, funding comes in. Common reasons owners look at a loan:

• IRD has declined a payment plan, or wants evidence the business can’t yet show (see payment plan declined);
• a previous arrangement broke down and IRD is less willing to agree another;
• the debt is large, covers several tax types, or includes PAYE;
• a statutory demand or liquidation application has set a deadline; or
• the business wants certainty and an end to enforcement, rather than years on a plan with interest running.

Why isn’t relief usually the answer for companies?

Many people search for “IRD debt write off” or “IRD hardship”. For individuals, serious hardship relief can apply. For companies, it can’t. IRD’s practice statement on relief explains that serious hardship is for natural persons, and that a company’s debt is written off only in limited cases, such as where it’s irrecoverable or not worth pursuing, or after liquidation (SPS 18/04). Anyone who promises a company a guaranteed write-off deserves some careful questions. See IRD debt write-off.

Want to know which route fits you? Our IRD debt options checker gives a ranked plan in minutes. Or talk to a funder directly, with no credit check to enquire.

How do deadlines change the picture?

Completely. Without a deadline, you have time to apply for an arrangement, wait for IRD’s answer and plan. With a statutory demand, you have about 15 working days. With a liquidation application, shareholders have 10 working days to appoint their own liquidator before IRD’s consent is needed. In those situations, paying in full, often with property-secured funding, may be the only route that fits the time available.

When is insolvency the right route?

When the business can’t recover. Signs include persistent losses, debts far larger than any realistic recovery, and no way to pay new tax as it falls due. Directors also have legal duties not to keep trading in a way that seriously risks creditors’ money. In that situation, a licensed insolvency practitioner can explain liquidation, voluntary administration or a compromise. We have nothing to gain from any of those routes, and our before you liquidate hub explains each one plainly, including what to check about any adviser.

How do you choose?

Ask yourself five questions:

1. Is the business viable once the old debt is dealt with?
2. How big is the debt compared with monthly cash flow?
3. Is there a deadline, such as a demand or court date?
4. Do you own property with equity?
5. Can you keep new tax current from here on?

If the answers are yes, large, yes, yes and yes, a property-secured loan is usually the strongest route. If they’re yes, modest, no, no and yes, an arrangement may be enough. Our arrangement vs loan cost check puts the two side by side in dollars.

An illustrative example

Illustrative only. Not a real client and not an offer.

A Dunedin design studio owes about $58,000: $14,000 of PAYE and $44,000 of GST. IRD has offered a plan for the GST, but the PAYE is attracting heavy penalties. The owners use a small cash-flow loan to clear the PAYE immediately, then keep to a 10-month arrangement for the GST. Total cost is lower than borrowing for everything, and the most dangerous debt is gone first.

What can a funder add?

A clear answer, quickly, about whether money is available to clear the debt in full. That answer is useful even if you end up choosing an arrangement, because IRD’s relief form asks companies whether they’ve tried getting a loan to pay (IRD). Knowing what funding looks like puts you in a stronger position for any conversation with IRD.

Get a straight answer

If you’d like to know whether funding should be part of your plan, start a 60-second enquiry. There’s no credit check to ask, your details stay with our team rather than being forwarded to other lenders, and a real person will call you. Answer the form as accurately as you can, especially what you owe and which letters you’ve had, and we’ll give you an honest view of every route, not just ours.