What if Winston’s $158,000 was an IRD debt?

A reader writes in:

Winston owes the taxpayer $158,000 from 2005.

If you apply IRD interest rates to the debt over 13 years you get $983,000.

The late payment penalties are here (IR240):

http://www.ird.govt.nz/resources/0/f/0f49a4e9-7fe0-4165-b397-987d67b6e8e8/ir240.pdf

We charge late payment penalties on all overdue payments. We charge the penalties in stages. This means that the longer a payment remains overdue, the more penalties we’ll add. The stages are: 

• 1% the day after the due date 
• 4% seven days later 
• 1% each month the tax to pay remains overdue.

This is what the taxpayer should now counter sue Winston to recover.

Sadly for the reader the debt can’t be collected as they retrospectively changed the law to prevent it.