Inland Revenue can’t disclose taxpayer–specific information to credit reporters. This means that lenders can’t find out if people have outstanding tax. This increases the chance of people getting into financial difficulties, and being unable to pay their tax or other debts.

Richard has a tax debt of $10,000. He wants to take out an unsecured loan from a finance company to purchase a boat. The finance company will not know that Richard has a tax debt, and this could encourage the finance company to lend to him.

Inland Revenue will be able to disclose tax debts to credit reporters. Inland Revenue’s proposed secrecy rules would allow it to disclose information that will improve tax administration. This includes being able to disclose to credit reporters the fact that a taxpayer has a tax debt.
Taxpayers will be encouraged to comply with the tax system and pay their fair share of tax, because if they don’t pay their tax debt this will affect their credit rating. It would encourage taxpayers to treat their tax debts as seriously as debts to other creditors.
Not all tax debt information will be given to credit reporters. It will only be released if it is overdue, over a specified amount, and is not the subject of a dispute. Inland Revenue will still be responsible for collection of the tax debt.
 

Richard has a tax debt of $10,000. He wants to take out an unsecured loan from a finance company to purchase a boat. Under the new proposal the finance company will be able to check Richard’s tax-credit rating and find out that he has a tax debt. The finance company can make a better-informed decision about whether to lend to him. Richard has an incentive to pay his tax debt to avoid damaging his credit rating.