Inland Revenue is starting to "overreach" by using "extraordinary actions" - such as freezing orders - in tax cases that are quite routine, says an academic.

The comments come after a High Court judge rebuked the IRD for a freezing order application that contained "significant, avoidable and troubling" errors.

University of Auckland Business School senior lecturer in tax law Mark Keating said the case was an instance where the IRD was over-reaching by using measures such as freezing orders in routine disputes.

Inland Revenue last month deemed that two liquidated companies associated with Rotorua businessman Marcus Dymock owed $462,000 in tax after a land purchase.


The companies' liquidator then sought $450,000 from Dymock, already having $25,000 on hand, which in total could meet the tax liability if it was ultimately proven.

After some complications the $450,000 arrived in the liquidator's account but the IRD did not check if this had happened before making an ex parte application to the High Court for a freezing order.

An ex parte application is where a defendant is unaware the application is taking place.

The freezing orders were subsequently granted over bank accounts of Dymock and his wife Charlotte. However, the couple were successful in getting the freezing orders set aside this week after applying to the High Court.

In his decision, Justice Simon France was critical of parts of the IRD's application.

Justice Keating said the IRD was using measures such as freezing orders in more and more cases.

Asked for its response on this contention, an IRD spokesman said: "Where necessary, the Commissioner of Inland Revenue uses a range of legal actions, including freezing orders, in cases to protect the public interest.

"Freezing order applications are only made after serious consideration of the particular case in question. As with all court decisions, we are currently reviewing the High Court decision in the Dymock case."