There are different types of tax payment plan, for a legal entity, for an individual or a business, it is recommended to set up a tax payment plan. Before setting up a tax payment plan, there are some methods of payment you should know about planning tax payment, for instance, in the United Kingdom, you can either pay your tax bill on time by Direct Debit, by setting up a budget payment plan including paying your tax bill in instalments, by cheque through the post or through your tax code[i].
If you cannot pay all your tax bill, you may be able to pay your bill in instalments by Direct Debit, or get more time to pay[ii] (in this case, you would have to pay interest on the amount you pay late), it only could happen when HMRC thinks you genuinely cannot pay in full now but will be able to pay in the future[iii]. Failure in tax payment will trigger the ¨enforcement action¨ taken by HM Revenue Customs to get the money. Failure in paying on time may also result in a payment of penalty or surcharge.
An authorized representative (Power of Attorney) from a prestigious law firm would be able to help an individual or a business in setting up a tax payment plan successfully. Tax payment plans usually can be immediate payment, short-term payment plan and long-term payment plan. For instance, In United Kingdom, a company’s profits for an accounting period are at an annual rate of more than £1.5 million normally the Corporation Tax must be paid electronically, in instalments[iv].
Keep in mind that, except for the immediate payment, the instalment agreement normally charges some fee for tax payment plan setting up (pay in instalments), with which an extended timeframe is allowed for the taxpayer to eventually to pay in full (tax owed, interest and penalties) within the abovementioned period. Generally speaking, the ¨failing to pay penalty¨, after setting up a tax payment plan and enrolled in tax payment in instalments, will be reduced by a certain amount according to the corresponding authorization. Such method allows enterprises to be flexible with their back tax debts and along with other bills.
[i] HM Revenue & Customs
[ii] HM Revenue & Customs
[iii] HM Revenue & Customs