Press release: ‘Pay-as-you-go’ could assist in managing cash flow but HMRC must raise awareness of the current ability to pay by direct debit
The Association of Taxation Technicians (ATT) has welcomed today’s Budget announcement that the Government will be introducing a ‘pay-as-you-go’ facility for self-employed people and landlords to pay their tax from 2018.
The move is part of the Government’s wider project on Making Tax Digital which will see small businesses and landlords keeping digital records and providing regular digital updates of their income to HMRC from April 2018.
The ATT has welcomed the ability for self-employed people and landlords to voluntarily choose to make more regular payments to assist their cash-flow.
Michael Steed, President of the ATT, commented:
“Many taxpayers will welcome the ability to pay their tax bill in more manageable bite-size chunks, rather than in one or two larger lump sums. However, the ability to pay tax liabilities by direct debit does already exist but is under-publicised by HMRC. If there were better awareness of this payment method then I am sure many taxpayers would indeed sign up for it. We would advise HMRC that increasing the publicity around the ability to pay by direct debit now might ease the transition in 2018 and encourage more people to sign up to the voluntary ‘pay-as-you-go’ system.”
The ATT believes that a ‘pay-as-you-go’ system which allows the taxpayer to draw down on any payments made, similar to when someone makes overpayments on their mortgage, would be beneficial.
Michael Steed added:
“Making advance payments of tax based on the quarterly updates can be useful in effectively putting money aside to meet the final tax bill. However, if it deprives a business of necessary working capital it could be detrimental to the continued existence of the business. That is why it is important that the ‘pay-as-you-go’ facility is both optional and has the ability for the taxpayer to recall some of the money set aside if it is required for the business.”