13.Some taxpayers find it difficult to pay their tax liabilities, particularly those with annual or twice yearly payment dates. Consultation and research have indicated that small businesses in particular would like a more flexible system that allows them to make smaller and more frequent tax payments than at present, which could help them better manage their cash flow.
14.HMRC supports those in temporary financial difficulty once a sum has become due through its Business Payment Support Service. It also offers a range of methods for payment in advance, including income tax budget payment plans and certificates of tax deposit.
15.Managed payment plans would allow taxpayers to spread their payments either side of the normal due date for payment of the tax, so long as those made in arrears are balanced by those made in advance. Entry to the plan will be voluntary.
16.While in the plan, taxpayers will not have to pay interest and penalties on instalments made after the normal due date. If they fail to make the agreed payments they fall out of the plan and the normal consequences for late payment will follow for the amounts unpaid at the date of the failure. However, taxpayers who fail to make the payments, but who remain in contact with HMRC about their debt, may be relieved from penalties that would otherwise arise. This is in line with HMRC’s Time to Pay arrangements to reschedule debt.
17.While it is expected that the details of any managed payment plan will be set out in the terms under which they are made available, HMRC may if appropriate specify these in regulations.
18.This measure was the subject of initial consultation in June 2007 and further consultation in December 2008 (Payments, Repayments and Debt: the Next Stage.) Draft legislation was published for consultation in January 2009, and a response document and a final Impact Assessment in April 2009.