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High Court dismisses judicial review of decisions to decline proposals for relief under s 177 of the TAA

Decision date: 30 May 2025
Case: Anthony v CIR [2025] NZHC 1382

Summary

This was a judicial review challenging the Commissioner of Inland Revenue’s refusal to grant financial relief under s 177 of the Tax Administration Act 1994 (TAA). The case concerned the Commissioner’s discretion to decline:

  1. A proposal by Mr Roshan Anthony (sole director of Summit Scaffold NZ Limited) to set aside a default judgment and pay personal tax arrears; and

  2. A proposal by Summit Scaffold NZ Limited to enter an instalment arrangement for company tax arrears.

The Court reaffirmed that while the Commissioner must consider recovery of tax arrears, broader statutory duties under ss 6 and 6A, including protecting the integrity of the tax system and promoting voluntary compliance, also apply.

Facts

  • March 2024: Commissioner filed debt proceedings against Mr Anthony for $180,886.52 (unpaid income tax 2019–2023).

  • July 2024: Judgment debt of $181,248.69 sealed against him.

  • May 2024: Commissioner initiated liquidation proceedings against Summit Scaffold for $399,220.27 (GST, PAYE, income tax).

  • June–October 2024: Five proposals for instalment arrangements were made and declined.

  • 22 October 2024: Final proposals submitted by counsel:

    • Mr Anthony offered to pay $54,387.86 within two months (serious hardship claim under s 177(1)(a)) and requested consent to set aside judgment.

    • Summit Scaffold offered to pay $533,329.32 arrears under s 177(1)(b) via instalments, including a $100,000 lump sum.

Commissioner’s response

  • Accepted Anthony’s offer to pay personal arrears but declined to consent to judgment being set aside (no statutory basis).

  • Declined Summit Scaffold’s proposal, citing poor compliance history and the need to protect tax system integrity (six-page letter dated 24 October 2024).

The applicants alleged errors including failure to consider revenue maximisation, disregard of compliance efforts, breach of legitimate expectation, and procedural unfairness.

What the case was about

Mr Roshan Anthony and his company, Summit Scaffold NZ Limited, owed a lot of unpaid tax. They asked Inland Revenue (IRD) for relief:

  • Mr Anthony offered to pay his personal tax debt in full within two months but also wanted IRD to agree to set aside (cancel) a court judgment against him.

  • Summit Scaffold offered to pay part of its company tax debt up front ($100,000) and pay the rest over time in instalments.

IRD accepted that Mr Anthony could pay his tax but refused to cancel the judgment, and it refused Summit Scaffold’s instalment plan because of its poor track record of not meeting tax obligations.

Both Mr Anthony and his company went to the High Court to challenge IRD’s decisions, arguing they were unfair.

What the Court decided

The High Court sided with IRD:

  1. For Mr Anthony – The law does not allow IRD to agree to cancel a court judgment. Relief is only available if someone shows serious hardship or requests an instalment arrangement.

  2. For Summit Scaffold – IRD was entitled to decline the instalment plan because:

    • The company had a bad history of non-compliance (missing payments in the past).

    • Even though paying in instalments might recover more in the short term, IRD must also think about the integrity of the tax system and public confidence. If taxpayers with poor compliance histories were always given relief, other taxpayers might see the system as unfair.

  3. The Court also noted that Summit Scaffold was essentially insolvent (it couldn’t pay its debts as they fell due).

Key points 

IRD has wide discretion (freedom) in deciding whether to accept payment plans or give relief.

  • The Commissioner must balance:

    • Collecting as much unpaid tax as possible, and

    • Maintaining the integrity of the tax system (fairness and compliance across all taxpayers).

  • A history of poor tax compliance can justify refusing relief.

  • Courts will not override IRD’s decision unless IRD has clearly acted outside the law and here, it had not.

Why this matters

  • Taxpayers can ask for instalment arrangements or hardship relief, but IRD does not have to say yes.

  • Past non-compliance (missed payments, broken arrangements) makes it very likely IRD will refuse.

  • Relief options are limited, you can’t use them to undo a court judgment.

  • Being unable to pay debts when due = insolvency, which strengthens IRD’s position in refusing relief.

In short: This case confirms IRD can refuse tax relief proposals if it thinks the refusal protects the tax system’s integrity, even if the proposal looks like it might bring in more money in the short term.

New Zealand Tax Accountant.