Two big challenges with bringing forward tax payments, says Tax Institute
Commenting on today’s launch of a call for evidence on Timely Tax Payments, Richard Wild, CIOT Head of Tax Technical, said:
“We have some concerns about bringing forward tax payments by self-employed people and smaller companies so these are made in-year.
“Inevitably there are two big challenges with this reform.
“First, the practical difficulty that is often not clear until the after the end of a tax year how business income will translate into taxable profits. And second, that in terms of any transition to a new system the government either needs to ask some taxpayers to pay two lots of tax in one year, or the Exchequer has to miss out on a year’s tax. For different reasons both of these options would be likely to prove politically challenging!
“A facility to make voluntary payments in-year already exists via the Budget Payment Plan. We welcome the additional funding for HMRC to improve this facility, and awareness of it, so that taxpayers who prefer to make payments regularly and in-year know that they can do so.”