Cash-strapped companies are accusing Inland Revenue of delaying tax refunds according to a report in NBR's print edition.

They say they have overpaid their provisional tax and now demand their funds back.

Tax experts spoken to by NBR said the IRD is being "quite reserved" about paying GST refunds and provisional tax.

"We're seeing it quite a lot and have been for months," Kensington Swan partner Peter Speakman, who specialises in taxation, said.

"We are in refund territory this year- provided the government pays out."

While the IRD formally denies any go slow, it has the legislative authority to withhold a refund if it starts an investigation during the period the refund is due.

"The authority is being very hawkish, generally, about IRD audits. It's a clear sign that the government is concerned about the tax market," Mr Speakman said.

"The government thinks 'how much cash did we collect' and has a hernia if it's far reduced from what they were expecting," he said, blaming Inland Revenue for trying to hold onto tax.

Ernst & Young tax director Andy Archer said he knew of instances where tax refunds had been delayed because the IRD had dragged out the assessment process and/or put taxpayers under review.

"I wouldn't go as far as to say they are managing cashflow - it might have a linkage to a shortage of staff," Mr Archer added.

There had been instances recently when accountants at Ernst & Young had faced difficulties contacting the necessary staff at the IRD to sort out claims. And even when they had, they had been told it would take a month to correct issues and make the payments.

Mr Archer said Ernst & Young had also seen instances recently of GST refunds being held pending review where perhaps 12 months ago they would not have been - particularly for property developers and non-resident importers.

"We heard from a source that IRD operations had been instructed to verify every refund and not release it until they were 100% satisfied it was payable. This has resulted in some lengthy correspondence about issues such as 'what amounts to a taxable activity?'"

Mr Archer puts this down to the IRD tightening its own handling of GST returns.

"This would be seen by the IRD as prudent in this environment where business cash shortfalls are sometimes supplemented by inappropriate GST claims, where an early payout may not be recoverable as the business is distressed and goes under," he said.

In other words, the IRD is holding on to cash longer in case a company goes under, having made inappropriate claims that the department then can't recoup.

Deloitte managing tax partner Thomas Pippos agreed and said it was possible these additional processes were holding things up.

He didn't believe that there was general tardiness on the part of the department but that concerns were being raised because people needed their refunds more urgently.

An Inland Revenue spokeswoman denied any increase in the delays over tax refunds, saying that GST refunds before the end of April had been returned at a rate better than set out in Inland Revenue guidelines.

Inland Revenue guidelines state 80% of customers not registered for GST will be processed within four weeks - it managed to return 87.8% in this time. While 95% of those GST registered should have their refunds within three weeks, Inland Revenue managed to return 98.4% of them within the timeframe.

"In most cases when the customer has provided all the required information on their return it is quickly processed through our system and any refund released. If a return arrives where addition action is indicated - especially where credit or debit thresholds are exceeded - staff move quickly to resolve the issues and complete the assessment," the spokeswoman said.

She said that occasionally when bulk volumes arrived at peak times it did place additional strain on resources.