Making payment arrangements

Introduction

A payment arrangement is an agreement under which the collector accepts unpaid tax over a period of time. Sometimes this involves your paying the full amount of tax a little late, but more often it is an agreement to make a number of payments over a period of time.

The time the Revenue will allow

There is a reported hardening of the approach to time to pay within the Revenue, which will become clearer after their guidance to staff from April 2004. However, our experience to date is that each case is considered on its own merits, although in general the collector will want to see the tax cleared within 3-6 months. Longer periods have been allowed in cases of exceptional hardship, but it is becoming apparent that staff have been told that "exceptional hardship" should no longer be a factor and that any request should be based on ability to pay. This would be based on full documented income and expenditure details supplied by the client.

If your request is accepted

If the collector agrees to your request for time to pay, you should receive confirmation of this in writing.

If you receive a verbal agreement at a meeting or on the telephone, ask for it to be confirmed in writing. If not, there could be difficulties later if there is a dispute over exactly what was agreed.

If the collector rejects your proposal

The collector has a duty to consider your proposal.

If you believe that it has been rejected out of hand, without being properly considered, you may make a complaint and ask for your proposal to be referred to a more senior official and for a full response in writing.

If you complain, you may want to refer to the following government statement that was by the made by the Financial Secretary to the Treasury on 8 February 1993 :

"The Revenue recognises that businesses may face temporary financial difficulties and in such circumstances the Collector should be contacted at the earliest opportunity to discuss how the difficulty may be resolved. All reasonable offers of payments, including payment by instalments, are considered."

Other points on time to pay

If you want more than three months to clear the tax, the collector will insist that you complete a financial statement giving details of your income and outgoings, and assets and liabilities.

The collector will not accept a lump sum - of less than the tax due - in full settlement. But an offer of such a lump sum may help to persuade the collector to accept the rest of the tax over a period of time.

Any proposal for time to pay must take account not just of the tax that is currently due, but also of any amounts that will fall due during the period to be covered by your payments. And the self-employed must also normally undertake to submit any self-assessment tax return falling within the period of the arrangement, on time.

e.g. If you are asking for 12 months to clear your tax arrears, the amounts that you propose to pay during that period must be enough to cover the tax that is currently unpaid as well as any amounts - and tax returns, if you are self employed - that are expected to fall due during the 12 month period.

When making a proposal, be careful of offering more than you will be able to afford. If you fall behind with an agreed scheme of payments, you may try to renegotiate, but you will have lost some credibility and the collector may decide to proceed to enforcement.

If you are requesting a short delay, to allow you to raise funds by selling a property, the collector may agree to grant the extra time if your solicitor gives a written promise to pay the Revenue directly from the money received on the sale.