If you are linked to Inland Revenue's myIR you may receive correspondence via the online service notifying you of upcoming tax payments, or credits available for refund. However if you are also with a tax agent or accounting firm these notices have the potential to cause issues.
Your accountant may have your tax credits reserved to cover other tax liabilities which have not yet been actioned by Inland Revenue at the time they issue your refund notice.
In the event you instruct IRD to release these earmarked refunds you risk penalties and use-of-money interest being applied to the unpaid taxes. It is possible neither you nor your tax agent may become aware of this situation for some time, resulting in potentially significant accruals of penalties and interest.
On the other side of the coin, tax amounts Inland Revenue notify as being due for payment may differ from the final tax liability your accountant arrives at. In this instance you risk over- or under-paying your taxes, and in the latter case also possibly incurring penalties and interest.
Should you receive correspondence or notices from IRD advising of taxes to pay or refunds available, we recommend you contact your accountant or tax agent to confirm the information before taking any action.
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