An Inland Revenue Department (IRD) crackdown on schemes using service companies to avoid tax has uncovered thousands of cases of questionable use of such vehicles throughout the professional services sector, sources say.
Professional partnerships in areas as diverse as accounting, surveying, law and medicine have been the primary focus of the IRD.
The disputed schemes have been noted in service companies established by people at all levels, from managing partner figures at major professional firms to low-level staff at small offices.
Despite the increased scrutiny of professional firms, senior IRD officials harbour concerns that misuse of service companies may return once legislation allowing the formal incorporation of accounting and legal firms is implemented.
The legislation was introduced last year to capture tax avoidance by executives, but increasingly it is the misuse of the schemes in the professions that is occupying the IRD's attention.
This largely is because of the unique structure of partnerships and the limitations they put on salary packaging.
The IRD is believed to be negotiating for retrospective tax payments from the many professional firms involved, as part of 'package deals'.