Philp added: “We know businesses in the construction sector have struggled with increases in the cost and availability of materials, supply chain constraints and labour shortages over the last few years.”
Firms were also dealing with the pressures of running businesses through the pandemic and the aftermath of recent cyclones.
“Despite these struggles, the sector has continued to grow, fuelled mainly by large infrastructure and ‘shovel ready’ projects, free apprenticeships and trades training and an ongoing focus on housing stocks, particularly new builds,” he said.
Under-declaring income, often via cash jobs, is prevalent in the construction sector. Some people actively avoid their tax obligations, while others may be simply struggling to keep up with the day-to-day grind.
The construction sector had the highest amount of tax debt and customers in liquidation, he said.
The crackdown comes at the same time as a string of financial failures in the sector. Many of those have IRD in the list of creditors, owing millions of dollars in tax.
Auckland Building Specialists, started in 2005, went into liquidation a few weeks ago owing IRD $1.1m.
Bayside Designer Homes owes creditors $2.5m and left nine Auckland housing sites unfinished at Milford, Beach Haven, Hobsonville, Castor Bay, Mt Roskill, Massey, Rothesay Bay, Sunnyvale and Papakura.
But it also owed Inland Revenue $125,000 and a separate $27,000, according to the first liquidation report.
Former television presenter Ingrid Hipkiss and partner Jack Tarrant were creditors with Bayside along with eight other parties named in a report on the failed business for having homes under construction.
Hipkiss was disappointed about the situation and said her new Three Kings home was liveable but unfinished.
Inland Revenue’s tax toolbox said the department knew “most tradies are trying to do the right thing”.
It has seminars for people in the sector to watch including a GST workshop.
It lists what expenses can be claimed, employer obligations to tradies and staff, has information on GST for entities whose turnover is more than $60,000/year and encourages good record-keeping.
It tells those who have forgotten some income in past returns to make voluntary disclosures.
“Forgotten some income off your past tax returns, overinflated your expenses, or perhaps you remember an error you made in the past? We want to give you a chance to put things right,” Inland Revenue said.
“It’s never too late to do the right thing - get in touch with us sooner rather than later. By making a voluntary disclosure you may have penalties reduced by 100 per cent and you’ll keep your good business reputation intact,” the toolbox link says.
