Imminent changes to time to pay arrangements
Taxpayers struggling to meet their tax liabilities on time can ask HMRC for more time to pay or to pay their tax in instalments. In either case though, interest will be charged on tax paid late.
Upon contacting HMRC with such a request, the Revenue will ask a person about:
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their income and expenditure
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their assets, such as savings and investments
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what they are doing to get their tax payments back in order
HMRC will then decide whether that person should be able to pay immediately or, if not, whether they will be able to get their payments back on track with more time. Only if HMRC genuinely think a taxpayer can’t pay the full amount immediately but will be able to pay in the future, will that person be offered extra time to pay.
Taxpayers will be encouraged to set up a direct debit to make payments on dates mutually agreed between the two parties and HMRC may agree for the tax to be paid in instalments.
From 3rd August 2015, however, it will be mandatory for those seeking an instalment arrangement to pay by direct debit. This is because HMRC say that:
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It is more cost effective and more secure than other payment methods;
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It removes the chance that the taxpayer will forget to make payment;
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Payments are more likely to be correctly allocated;
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Reduces the need for subsequent taxpayer contact, saving time for the taxpayer and HMRC; and
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Direct Debit scheme includes a guarantee to protect the customer.
Where a person is unable to set up a direct debit, perhaps because their bank account will not allow it, HMRC may agree other methods of payment.
Existing non-direct debit agreements will not be affected by these changes.
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