As part of Making Tax Digital (MTD), HMRC has published ‘Making Tax Digital: Voluntary pay as you go’, a consultation outlining the proposed arrangements allowing for wider use of interim voluntary tax payments.

Key highlights are:

  • Voluntary pay as you go will be introduced from:
    • 1 April 2018 for Income Tax, NIC and CGT
    • 1 April 2019 for VAT
    • 2020 for Corporation Tax
  • The statutory due dates for payments will not change.
  • The proposal is to look at all liabilities together, for example VAT, PAYE and income tax on profits.
  • HMRC will allocate voluntary payments against taxes as they fall due on a first in first out basis to mitigate interest and late payment penalties.
  • The pay as you go payments will be refundable, though HMRC may restrict refunds if a tax liability is about to fall due.
  • Payments on account rules may be revisited to enable them to be better matched to the quarterly submissions made by businesses.
  • Taxpayers will be able to elect for repayable overpayments to be treated as voluntary payments.
  • No decision has been made as to how to treat voluntary payment credits for interest purposes.
  • Processes will be put in place to help partnerships to make voluntary payments on behalf of partners.
  • HMRC have a planned randomised controlled trial for Self-Assessment customers due this summer and are considering ways of making the voluntary pay as you go more appealing.
  • HMRC expect the system to enable earlier repayments of overpaid tax.

The consultation will end on 7 November 2016.  The government will publish a response to this consultation as soon as possible, along with draft legislation.

Consultation questions: Making Tax Digital: Voluntary pay as you go

  • Question 1: Do you see any challenges with the voluntary payments process described? Do you think there are alternative options that should be considered, and if so, what are these?
  • Question 2: Do you have any views or suggestions on the display of voluntary payments in the digital tax account?
  • Question 3: Should there be a ‘period of grace’, and if so, what period would be appropriate to allow for separate payment of an amount becoming due?
  • Question 4: Do you have any general comments to make on the allocation of voluntary payments?
  • Question 5: Do you foresee any problems with HMRC’s intended approach to the allocation of voluntary payments?
  • Question 6: What improper or inappropriate use of the repayment facility do you think there may be, and what rules do you think should be applied by HMRC to stop that happening?
  • Question 7: Do you agree with a restriction on repayment shortly before a liability becomes due, and if so, what period or terms of restriction do you think should be put in place?
  • Question 8: Do you have any views or evidence on whether, and how, HMRC should revisit the sums paid as payments on account to match more closely to the sums being reported under MTD?
  • Question 9: Do you have any views or suggestions on customers’ ability to elect for overpayments to be held as voluntary credits?
  • Question 10: What are your views on how voluntary payments might work for partnerships? Do you think partners will see the convenience of direct payment towards their total liabilities as outweighing a loss of a limited amount of confidentiality?
  • Question 11: Do you think there are any special considerations that should apply to third party voluntary payments?
  • Question 12: What additional processes or measures would make customers feel more confident about making voluntary payments?
  • Question 13: Do you have any suggestions for the basis on which earlier repayments could be reasonably claimed?
  • Question 14: Please tell us if you think there are any other costs or benefits not covered in the summary of impacts, including any detail you may have.

Responses should be sent by 7 November 2016 by e-mail to: This email address is being protected from spambots. You need JavaScript enabled to view it.

Links

Our Making Tax Digital Index

External links:

HMRC consultation ‘Making Tax Digital: Voluntary pay as you go’

 

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