Date posted: 12/06/2019 7 min read

Update: Inland Revenue BT3 systems issues

Since IR’s system upgrade, CA ANZ has received feedback from members on many issues. CA ANZ have stressed that issues must be resolved in a timely manner and, that informative & regular updates are available on IR’s website.

In brief

  • Members have gone above and beyond to help resolve Inland Revenue Business Transformation – release 3 issues
  • CA ANZ have dedicated significant staffing resources to the identification and resolution of members BT3 issues and concerns
  • A number of items have been progressed and Inland Revenue are making positive changes. While many concerns are yet to be resolved, CA ANZ have stressed the importance of keeping members and tax agents up to date and well informed

Members have gone above and beyond

From our conversations with members in recent weeks, CA ANZ knows that Business Transformation Release 3 has not run smoothly for tax agents and that this has caused disruption to business and resulting stress for practitioners.

“Our members have gone above and beyond to provide detailed feedback which has greatly assisted our meetings with Inland Revenue” says NZ Tax Leader, John Cuthbertson.

We’ve heard you loud and clear

Since Inland Revenue’s system was upgraded in April CA ANZ has received feedback from members on a large number of issues and concerns regarding the output, functionality and availability of information on the new system.  Inland Revenue systems issues that members are currently dealing with are time consuming and detrimentally affect their business and relationships with clients. As high frequency users’ members as tax agents are bearing most of the burden from these issues.

From the outset we have shared with Inland Revenue all the issues identified by our members. When doing so we have isolated those issues with the largest impact on our members and their clients. These issues will require the most time and resources to resolve.

Our concern is that as well as impacting tax agents’ businesses directly, some of the issues have wider consequences for the overall tax system. CA ANZ believes it is crucial that our tax system be simple to understand and comply with. The system should help, not hinder, tax compliance.

Work in the Background

We have dedicated significant staffing resources to the identification and resolution of members Business Transformation – Release 3 issues.

We have had, and continue to have, regular discussions with key Inland Revenue officials, including the Deputy Commissioner of Customer and Compliance – Individuals.

In late May the CA ANZ National Tax Liaison Group (made up of CA ANZ staff and representative CA ANZ members from around the country) participated in a workshop with key Inland Revenue officials from the Business Transformation team to categorise and prioritise the issues and concerns raised by CA ANZ and other stakeholders; and to progress an action plan to address those matters still to be resolved.

Your ‘big ticket’ items

Some of the ‘big ticket items’ we have heard from members included: 

  • Concerns regarding the issuing of automatic refunds to individuals on a tax agent’s list.
  • Correctness of, lead time and frequency of debt letters and other correspondence issued to tax agents and their clients
  • Information showing on the summary of earnings (e.g. separation of PAYE and ACC; separation of PAYE income and schedular income)
  • Availability of imputation credit account details and student loan balances
  • Balances and assessment dates in myIR
  • Incorrect penalty and interest calculations; particularly, where tax pooling is used
  • Incorrect notifications regarding unread correspondence and amounts of tax payable
  • Functionality of and access to information on Inland Revenue’s website (in particular, Inland Revenue forms and guidance statements).

The above (and other issues) have been prioritised for action.

Progress so far

We have requested more regular updates for members and tax agents on progress and clearer communication on when a resolution (whether interim or permanent) can be expected.  Last week, Inland Revenue advised that communications to tax agents were being sent and a further update to the tax agent issues page of their website was expected.  This update now outlines the more than 20 issues Inland Revenue consider high priority, expected dates for short term resolution items and timeframes for longer resolution items.

In response Inland Revenue are redirecting resources from other areas to accelerate the resolution of the matters raised by our members.  They have also taken on board our views and concerns regarding the issuing of automatic refunds to individuals on a tax agent’s list.  Inland Revenue has undertaken to immediately investigate changes to the system to delay or control that function.

Some of the updates made last week which address some member concerns include: 

  • Refreshing the client list reports for the 2019 tax year, including updating report fields. There is now also a field to flag intention to use tax pooling for Income Tax
  • Changing the income tax display for 2019 to default to ‘last income year’ rather than ‘last 12 months’
  • Making ICA closing balances for the 2018 year and onwards available to view in myIR. 

Reducing the pressure

CA ANZ made a request to Inland Revenue to implement the following measures to reduce the pressure on tax agents over the Business Transformation 3 period: 

  • Turn off or reduce the frequency of automatic debt collection and named mail where returns or payments go astray as taxpayers and agents adapt to the new system
  • Put in place a relaxed policy on the remission of penalties over the coming months until the bulk of these BT issues can be resolved, and tax agents and taxpayers have greater certainty, and understanding as to how to comply with their obligations.

Given the impact on members’ businesses and to the erosion of taxpayer certainty, we have stressed to Inland Revenue that these issues must be resolved in a timely manner and, that informative and regular updates are promptly available on Inland Revenue’s website. These should include matters resolved and a reasonable timeframe to address all remaining outstanding matters.

Commitment to fix

Resolution of issues is likely to fall into several areas. Remedial fixes to the START computer system will be undertaken based on priority, while some issues may be resolved by further information and education. Some issues relate to how tax agents practically access information/complete tasks. While it will not always be possible to replicate the familiarity of the old system it is important that these new ways of working do not unfairly burden the user.

Inland Revenue assure us that the new system is more nimble than FIRST and this enables them to more quickly address programming fixes. Significant dedicated resources are in place over the “early life support” period for BT3 and are expected to last for a further 2 months. Programming resources will still be available to deal with other issues as they arise over the balance of the income year as people use certain functions for the first time whilst trying to complete tax returns/compliance tasks.

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