A notice of proposed adjustment tends to land on a normal Tuesday and ruin the rest of the week. It’s formal, dense and full of section numbers, and it usually means IRD thinks you owe more tax than you’ve paid. Take a breath. A NOPA isn’t a bill yet, and it isn’t a judgement on you or your business. It’s the start of a process with clear steps and clear deadlines — and the owners who come out of it best are the ones who treat those deadlines as sacred and plan the money side early.
This guide walks through what a NOPA is, what to do in the first week, how the two-month clock works, and how to make sure a tax adjustment doesn’t turn into a cash-flow crisis.
What is an IRD notice of proposed adjustment?
A NOPA is the document IRD uses to start a formal dispute when it wants to change an assessment — for example after a review or audit of your GST, income tax or employer obligations. It sets out the adjustment IRD proposes, the facts it relies on and how it says the law applies.
IRD’s own description of the Commissioner-initiated disputes process lays out the stages: the NOPA, your notice of response, a conference, formal statements of position, and then adjudication by an independent unit inside IRD. Most disputes settle well before the later stages, especially when the response is clear and well supported.
It’s worth knowing the difference between a NOPA and a demand for payment. A NOPA proposes a change. Nothing is final until the process runs its course — or until you let the response deadline pass.
The deadline that matters most: two months
You have two months from the date IRD issued the NOPA to respond with a notice of response (IR771). The clock starts on the issue date, not the date you opened the envelope or logged into myIR.
If you don’t respond within that window, the law treats you as having accepted the adjustment. That’s the single most expensive mistake in this whole process, and it happens more than you’d think — usually because the owner was overwhelmed, the accountant was booked up, or the letter sat under a pile of invoices.
Do this today:
- Find the issue date on the NOPA and write the response deadline in your calendar, your phone and on a sticky note on the monitor.
- Send a copy to your accountant or tax specialist and ask for an appointment in the next week, not the next month.
- Pull together the records the NOPA refers to: invoices, bank statements, contracts, GST workpapers, payroll records.
Read it properly: what exactly is IRD proposing?
Once the panic settles, go through the NOPA line by line with your adviser and sort every item into three piles:
- Agree — IRD is right and you’ll accept it.
- Disagree — you have facts or a legal argument that IRD has it wrong.
- Not sure — you need more information or advice.
Owners often find the adjustment is a mix. Maybe IRD has correctly picked up a GST error on one quarter but misunderstood how a related-party transaction worked. Your notice of response can accept part of the NOPA and dispute the rest, and being specific narrows the argument, lowers the cost and makes it far easier to plan the money.
A tip from owners who’ve been through it: write a one-page plain-English summary of what IRD is saying and what you think the real position is. It keeps everyone — you, your accountant, your business partner — on the same page.
Writing the notice of response
Your notice of response needs to set out which parts you dispute, the facts you rely on, the legal arguments, and what adjustment (if any) you think is correct. Use IRD’s form and follow its content requirements.
This is not the place to vent or to promise to “sort it out later”. Anything you leave out can be hard to bring in at a later stage of the dispute, so completeness matters more than brevity. That’s why a tax specialist is usually worth the fee here — they know what IRD needs to see and how to frame it.
If you agree with everything, you still need a plan: IRD will amend the assessment and the extra tax, plus interest, becomes payable. Which brings us to the part most owners leave too late.
The money side: plan it now, not after the dispute
Tax adjustments rarely arrive when cash is plentiful. And while a dispute runs, use-of-money interest can keep building on any tax that’s ultimately confirmed as owing. IRD’s guide to disputing an assessment (IR776) explains how payment, deferral and interest work during a dispute — read it with your adviser, because the details depend on your situation.
Practically, owners usually end up choosing between:
- Paying from cash reserves — clean, if the reserves exist and the business can spare them.
- An IRD instalment arrangement — useful for manageable amounts; see our guide to IRD instalment arrangements.
- Refinancing the tax bill — a lender pays IRD directly and you repay the lender on terms that suit the business. See how IRD debt refinance works.
If the adjustment covers the part you accept, you can often settle that portion now and keep only the genuinely disputed amount in play. That can take real heat out of the situation — with IRD and at home.
Want to know your options before you respond? Start a 60-second enquiry — there’s no credit check when you first enquire.
A worked example (illustrative only)
A Tauranga building contractor receives a NOPA after an IRD review of two years of GST. IRD proposes adjustments on three issues. With their accountant, the owners agree one issue was a genuine coding error, dispute one based on signed contracts, and are unsure about the third.
They file a notice of response well inside the two months, accepting the first item and disputing the rest. At the same time they speak to a lending specialist about funding the accepted amount plus a buffer. Because the owners have equity in a rental property, a property-secured loan is arranged to pay the accepted tax to IRD directly. The dispute on the remaining items continues without the pressure of an unpaid balance hanging over the business — and the exit is clear: refinance to the bank once the next year’s accounts are in.
What lenders look for when there’s an IRD dispute
A dispute with IRD doesn’t automatically close the door. Mainstream banks tend to step back, but specialist and private lenders look at different things:
- Security — residential, commercial or rural property owned by the business, a director or a supporting party.
- The exit — how the loan will be repaid: refinance, sale of an asset, or trading income once the tax is dealt with.
- Honesty about the situation — a clear explanation of the NOPA and where the dispute stands.
We arrange property-secured loans from $20,000 to $1m for situations exactly like this, often with no financials needed for the first assessment. If you’re also behind on returns, our guide on business loans when you’re behind on tax returns explains how that’s handled.
Don’t let a tax dispute push you towards the wrong door
When a big tax number arrives, some owners get told the answer is liquidation or voluntary administration before anyone has looked at the funding options. Sometimes that advice is right. Often it’s premature. A business that’s trading, with property behind it and a clear plan, can usually be funded through an IRD adjustment and come out the other side intact. Before you sign anything with an insolvency firm, read what to know before you talk to a liquidator.
Let’s get the money side sorted
A NOPA is stressful, but it’s a process — and you don’t have to face the funding part alone. We help New Zealand business owners deal with IRD every week, and we’re one of the few lenders who don’t flinch at a tax dispute.
Here’s how it works with us:
- About 60 seconds to tell us what’s going on.
- No credit check when you first enquire — it won’t touch your credit file.
- Your details don’t get sent to a pile of lenders. No spray-and-pray, no phone ringing off the hook.
- A real person looks at your situation and calls you to talk it through.
Please fill the form in accurately — the right numbers help us find the right option first time.