⚠️ IRD Warning: Serious Consequences for Failing to Pass On PAYE Deductions
Inland Revenue has issued a rare Revenue Alert highlighting serious concerns around employers failing to pass on PAYE deductions. Given how infrequently these alerts are released, this signals a significant compliance risk for employers.
What the Revenue Alert Covers
Issued: 16 March 2026 
The alert focuses on situations where employers deduct PAYE and other amounts from employee wages but fail to remit those funds to Inland Revenue by the required due date.
Employers are legally required to pass on all PAYE deductions, along with any other payroll-related amounts, within the prescribed timeframes.
Why This Matters: Legal and Criminal Risk
Failing to pay deducted PAYE to Inland Revenue is not just a compliance issue—it is treated as a serious offence.
Employers who make deductions and do not pass them on may face criminal penalties, including:
- Prosecution by the Commissioner of Inland Revenue
- Significant financial penalties
- A maximum sentence of up to five years’ imprisonment
The Revenue Alert makes it clear that Inland Revenue will consider prosecution where this behaviour is identified.
What Employers Should Do Now
- Ensure PAYE deductions are correctly calculated and remitted on time
- Review payroll processes and internal controls
- Act quickly to address any outstanding PAYE liabilities
- Seek advice if there is any uncertainty or risk exposure
Further Information
For more detail on this Revenue Alert, you can access the full guidance from Inland Revenue.
How Business Canterbury Can Help
Managing PAYE obligations and payroll compliance can be complex, particularly where issues arise or processes need review. Our team can support you with practical guidance to reduce risk and ensure your obligations are being met.
We can assist with reviewing payroll practices, identifying potential areas of exposure, and providing advice on how to address any issues early—before they escalate.
For tailored support, contact our HR Advice team at hradvice@businesscanterbury.co.nz.
