Company Continued Trading After Being Struck Off: IRD Uncovers Over $500,000 in Tax Evasion

IRD recently reported a tax evasion case involving a South Auckland couple operating in the property renovation industry. The couple were sentenced by the court after failing to meet their tax obligations over an extended period, receiving business income through multiple bank accounts and providing false information to IRD, resulting in tax evasion involving more than NZ$500,000.

On 5 October 2026, both individuals were sentenced at the Manukau District Court. One received nine months of home detention, while the other was sentenced to six months of community detention, along with 160 hours of community work and 18 months of intensive supervision.

Continued Trading After the Companies Were Struck Off

The couple established two property renovation companies, registered in 2015 and 2021 respectively. Due to their failure to file the required company annual returns, the companies were removed from the New Zealand Companies Register in January 2021 and January 2023.

However, even after the companies were struck off, the couple continued operating their renovation businesses under the original company names. According to IRD's investigation, the businesses generated an estimated NZ$1.8 million in taxable profits over nine years.

It is important to understand that removing a company from the Companies Register does not automatically eliminate tax obligations arising from business activities. If a business continues providing services and receiving income, the relevant tax obligations must still be met according to the actual circumstances.

Multiple Bank Accounts Used to Conceal Business Income

IRD's investigation found that substantial amounts of business income were deposited directly into one of the individuals' personal bank accounts or other accounts over which that person held joint signing authority.

The court found that distributing business income across multiple accounts was a deliberate attempt to make it more difficult for IRD to identify the true income and calculate the tax payable.

Regardless of whether customer payments are received into a company bank account or a personal bank account, the income must be treated correctly for tax purposes according to the nature of the underlying transactions.

For businesses operating multiple companies, using several bank accounts or frequently transferring business income into shareholders' personal accounts, maintaining complete transaction records is particularly important.

False GST Returns Submitted Even After an IRD Audit

Another notable aspect of the case was that some GST returns submitted after IRD had already commenced an audit still contained false information.

The court noted that the couple had engaged in a deliberate and systematic pattern of tax evasion over approximately eight years. They not only failed to meet their filing obligations but also provided false information and failed to cooperate with IRD's requests for verification.

Ultimately, the couple faced a combined total of 14 tax evasion charges involving more than NZ$500,000.

This case serves as a reminder that submitting outstanding tax returns after receiving an IRD audit or investigation notice does not necessarily mean the issues have been resolved.

If historical accounting records contain errors, businesses should first review bank statements, sales income and relevant transaction records to ensure that any information subsequently submitted is accurate and complete.

Ysquared Reminder

If your business has continued trading after being struck off the Companies Register, received payments through multiple bank accounts, failed to file historical GST returns or mixed company and personal funds, it is advisable to review the relevant tax records as early as possible.

In particular, businesses that have already received IRD tax investigation notices, audit notifications or requests for additional information should first confirm whether their historical income, bank transactions and tax returns are consistent before deciding how to respond.

Ysquared Chartered Accountants can assist businesses with:

• IRD Tax Audits and Investigations: Organising supporting documents, reviewing tax issues and communicating with IRD.

• Historical Tax Returns: Preparing outstanding or amended GST, company income tax and individual income tax returns.

• Voluntary Disclosures: Assessing historical tax issues and assisting with voluntary disclosures where appropriate.

• Tax Debt Negotiations: Assisting with payment arrangements and assessing eligibility for penalty and interest remission.

• Company and Personal Financial Reviews: Reviewing bank transactions, shareholder current accounts and income records.

Removing a company from the Companies Register does not mean its tax obligations disappear, and receiving business payments into a personal bank account does not mean the income is exempt from reporting.

If your business has historical tax issues, reviewing and addressing them early can help clarify the actual risks and identify practical solutions.