Call for evidence: Timely payment

In 2020 the government published a ten-year Tax Administration Strategy. One of its aims is to achieve a tax system that works closer to real-time through increased digitisation. The idea is that this will make it easier for taxpayers to manage their tax cashflow and thereby avoid tax debts arising, the so-called ‘tax gap’.

HMRC research shows that:

• Many taxpayers would prefer a system that required them to pay smaller regular tax payments instead of the current system which requires fewer larger payments.
• The current system causes difficulties for those entering Self Assessment for the first time such as the newly self-employed and new landlords.

The call for evidence seeks to explore the appropriate frequency and timing of tax payments, alongside planned changes to Income Tax (IT) and Corporation Tax (CT) reporting under Making Tax Digital (MTD). In particular, it looks at the tax payment regimes in other countries such as Australia and the USA where payments are made quarterly, and France which moved to a quarterly and monthly payment regime in 2019.

It also considers how tax payments should be calculated, especially for those taxpayers who will fall outside of MTD and whether the use of Flat rate expenses is appropriate.

It defines ‘Timely Payment’ as “bringing the calculation and payment of tax closer to the point where the income or profit arises, paying tax based on the taxpayer’s current year position using, where possible, up-to-date data”.

In scope taxes, which make up 34% of all outstanding debts to HMRC are:

• Income Tax and National Insurance Contributions (NICs) outside of PAYE, currently paid twice yearly on account with balancing payments by 31 January after the end of the tax year.
• Corporation Tax outside of the Quarterly payment regime, currently due nine months and one day after the end of the company accounting period.
• Views are also welcomed on the more timely payment of:
  • Capital Gains Tax (CGT) for disposals outside of the current rules for paying CGT on residential property sales.
  • Other taxes administered by HMRC, except VAT which is already being looked at.

Responses to the call for evidence are invited by email to This email address is being protected from spambots. You need JavaScript enabled to view it.. The deadline is 13 July 2021.

Useful guides on this topic

Companies: Filing & payment deadlines
If you run a UK business via a UK-registered company you will have the following ongoing filing & payment deadlines.

MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital? How will it work? Which clients will be excluded? What planning needs to be undertaken? 

CGT: Payment of tax
When is Capital Gains Tax (CGT) due? Can I pay in instalments? What are the penalties if I pay late? What are the new rules from April 2020?

Penalties: Late Payment
What penalties are charged when tax is paid late.

External links

Call for evidence: Timely payment 

HMRC & HM Treasury: Tax Administration Strategy report 

Q1. Do you have any comments on the benefits and challenges of timely payment outlined above?

Q2. Please provide a narrative, with examples if possible, of any other benefits, challenges or impacts which you consider should be of central concern when looking at this proposal.

Q3. What are the relative merits and disadvantages of tax payment regimes in other countries compared to the UK’s?

Q4. Are there examples of tax payment timings from other states or territories which the UK should consider?

Q5. Where people have experience or data of timing changes in other countries (e.g. recently in France), what have been the impacts and what should have happened differently?

Q6. What are the advantages of the current payment timings? Are there any groups that rely more heavily on these than others?

Q7. What are the challenges with the current payment timings? Are there any groups who are challenged or disadvantaged more than others?

Q8. Do you have any comments on the specific challenges faced by non-business ITSA taxpayers (i.e. those in ITSA other than the self-employed, landlords, or large partnerships)?

Q9. Do you have any comments on specific challenges faced by low income or vulnerable taxpayers?

Q10. Do you have any comments on the specific challenges faced by new ITSA taxpayers?

Q11. What are the benefits of the existing payment timings for CT? Are there any types of company, sectors, or other distinctions which rely more heavily on the long payment window than others?

Q12. What are the challenges with the current payment timings? Are there any types of company, sectors, or other distinctions which make the current payment timings challenging or disadvantageous?

Q13. Do you agree that if there is to be a more frequent tax payment regime, it should generally be based on current year liability?

Q14. Do you have any initial comments on the benefits and challenges of different calculation options to meet diverse taxpayer needs versus one process for all taxpayers in scope?

Q15. What are your views on using digital solutions to facilitate in-year calculation, and what and how could specific groups be affected negatively by this?

Q16.Do you have any comments on how the needs of taxpayers for whom digital solutions are unavailable or challenging could be met when considering calculating tax liability in-year?

Q17. If tax payment and calculation was more regular under ITSA, what are the key ways in which it would need to align with PAYE, Simple Assessment, and more widely to get the best result for taxpayers?

Q18. Do you have any initial comments specifically on the impact of basis periods on more timely payment of ITSA?

Q19. Do you have any initial comments on other reforms that could support bringing tax payment closer to the point of transaction?

Q20. Do you have any initial comments on the feasibility and benefits for MTD customers of paying in-year instalments towards their tax bill, informed by their quarterly MTD updates?

Q21. Are there customers for whom MTD updates would be a particularly unreliable guide for in-year tax payments, and what alternative basis might be more reliable for them?

Q22. Do you have any initial comments on how income and expenses could be reported in year for non-MTD customers or on a more frequent basis than required by MTD?

Q23. Do you have any comments on potential interactions between reporting for Universal Credit and reporting for more timely payment of tax?

Q24.Do you have any comments on the benefits and disadvantages of flat-rate expenses?

Q25. What examples are there that work well and would be appropriate for Income Tax expenses that would not be captured through any MTD updates?

Q26. If there were flat-rate expenses, should they replace the actual expenses or only act as a proxy for in-year calculation?

Q27. If flat-rate expenses were introduced, should they be restricted to smaller businesses?

Q28. Do you have comments on the impact and challenges of recognising annual reliefs, allowances, deductions, and other amounts?

Q29. Do you have any initial views on the benefits and challenges of monthly, quarterly, or other, payment frequency?

Q30. Do you have any comments about how over or under-payments of tax could be resolved in-year?

Q31. What systems and processes exist that would help to ensure protection against fraud and organised crime, whilst also allowing quick and easy repayment?

Q32. How could more frequent payment based on current year liability be phased in?

Q33. Do you have any comments on any specific impacts that more frequent payment of tax could have on large partnerships and how these might be mitigated?

Q34. What methods do taxpayers use to budget for their tax bill?

Q35. Do you have any comments on what more HMRC could do to help taxpayers pay their tax on time?

Q36. Do you have any comments on the positive and negative cash-flow impacts for businesses of more timely payments?

Q37.What wider economic impacts do you foresee from reducing the time between income and taxation?

Q38. Which taxpayer groups will be most or least affected by the cash-flow impact of more timely payments?

Q39. Are there particular ways in which accruals accounting might lead to greater impacts on certain groups or types of business?

Q40. Do you have any comments on the cash-flow impacts on the case studies outlined above?

Q41. Is there a better way of grouping people to consider the level and nature of the impact on cash-flow, outside of trades?

Q42. What are the common uses for the funds that will become due as tax on income during the period before it is payable? Does this differ by business, trade, or other factors? Is there research, data, examples, or other supporting evidence to build up a picture?

Q43. Are there other taxes administered by HMRC that the government should consider for more timely payment of tax?

Q44. Do you have any initial comments on the opportunities and challenges of more timely payment of CGT?

Q45. Is there anything else you would like to suggest to help progress the exploration of this policy