IRD turns its focus to hospitality industry

The hospitality industry is considered a high risk group by the IRD. Photo / 123RF

The Inland Revenue Department has turned its attention to the hospitality industry in its latest campaign targeting undeclared income.

The industry is considered a high risk group as part of the IRD's long running hidden economy programme against tax crime.

Richard Philp, customer segment lead, said there's a disproportionately high number of overdue GST, income tax and PAYE payments from traders in the restaurant, café, bar and takeaway food sectors.

"Commonly we find those operators who fall behind on their tax obligations also have poor business records," he said.

"We see things like unrecorded sales, staff wages off the books and discrepancies between supplies bought and goods sold."

In the past, IRD crackdowns have focused around tradies doing under-the-table cash jobs.

Last week the Herald reported that according to Chartered Accountants Australia and New Zealand (CA ANZ), tax dodgers have left the IRD a billion dollars short.

The billion dollar amount is based on a Victoria University and IRD study released in April showing that New Zealand is missing out on about $800 million in its annual tax take due to the country's self-employed under-reporting their income by about 20 per cent.

John Cuthbertson, New Zealand Tax Lead for CA ANZ, said that work needed to be done in changing Kiwi attitudes to tax evasion.

"Under-reported income, manipulating your expenses and slipping a tradesman some bank notes, is not okay," he said.

"It's not a victimless crime. There's a cost to this behaviour and that cost is less money for health and education, social housing and the huge range of government services in need of more money."

Cuthbertson said CA ANZ is urging the Government to address this because it is one of the easier ways in which the Government could increase its annual tax haul.

He said that rather than putting pressure on other areas and looking to alter existing laws, the Government should first look into ensuring it gets the full amount due in a given tax year.

"This should be the first cab off the rank," he said.

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