"Lots of people underpay their tax by mistake," says tax expert John Shewan, formerly of PwC.
"The key question they often ask people like me is 'What do I do? Do I put it under the carpet and just hope it goes away?' Clearly no."
It’s best to own up quickly, says Mr Shewan.
"Inland Revenue is very approachable about these things. They encourage voluntary disclosures and, in fact, the tax legislation contains quite big concessions if people voluntarily disclose.
"Generally, if you offer up the tax that you have mistakenly not paid, the only penalty might be some use-of-money interest that Inland Revenue will charge you and that’s legitimate under the law."
Mr Shewan recalls helping a business owner who underpaid his tax by $20,000 after using out-of-date information to claim depreciation deductions on a number of business assets.
"They were very worried about the penalty implications, even thinking about leaving New Zealand. We rang Inland Revenue and said we would like to come and have a talk to them."
Inland Revenue waived the penalties and arranged for the business owner to pay the $20,000 shortfall in instalments.
"That taxpayer, having learnt the lesson, put in place new procedures and actually had a much more robust business going forward," says Mr Shewan.