Managed Payment Plans for Income Tax and Corporation Tax
05/08/2009
It can sometimes be difficult from a cash flow perspective to deal with annual or twice yearly tax payments so it may be preferable for certain businesses to spread these payments by the use of instalments.
HMRC have issued draft guidance regarding a system of Managed Payment Plans. These plans would allow tax payers to spread payment of liabilities over a period of up to 12 months spaced equally either side of the normal due date for the particular tax. Companies within the quarterly instalment regime or within a group arrangement are not eligible for these plans.
As a result of being within a plan, the taxpayer would be protected from both the interest and penalties which would normally be levied as a result of payments being made after the due date. However, the benefit of this must be weighed against the fact that the payment of some of the liability is being brought forward in advance of the standard due date of payment.
In order to set up a plan, the taxpayer must have already filed their tax return and have paid all previous tax. Alternatively, if there are earlier tax liabilities still outstanding, a separate time to pay arrangement must have been set up for the arrears. Instalment payments must be paid by Direct Debit or Standing Order.
For a taxpayer to benefit from the maximum 12 month payment period, tax returns must have been made and plans proposed by the following dates:
- 31 October for Income Tax Self Assessment taxpayers who are required to make Payments on Account on 31 January and 31 July
- 31 July for Income Tax Self Assessment taxpayers who are not required to make payments on account
- Six months before the normal due date for payment of corporation tax
If you would like advice concerning whether Managed Payment Plans could be of benefit to you or if you need assistance with your application, please contact the ASE tax department on 0161 493 1930