PAYE Services – Recovery of debts and payment plansWednesday, June 17th, 2009
The Finance Bill 2009 includes a number of measures that will assist HMRC in the prevention and handling of debt.
- Clause 96 and Schedule 49 provide HMRC with powers to obtain the contact details of debtors from third parties.
- Clause 109 and Schedule 58 give HMRC the power to collect small debts through the PAYE system, allowing debtors to spread payments and reducing HMRC’s costs.
- Clause 110 provides for HMRC to introduce managed payment plans.
HMRC has published draft Regulations and guidance to clarify how these arrangements will operate when they are introduced.
If the address held by HMRC for a debtor, including a company, is incorrect and it is not possible to trace the address through existing internal systems e.g. commercial facilities and, where legislation permits, government departments, HMRC will be able to ask a third party for the information, if there are reasonable grounds for believing it knows the address. The new powers will not permit other information about a debtor to be requested and HMRC may not approach friends, neighbours or relatives, other government departments, charities or individuals who have not had a business relationship with the debtor. If a third party does not provide the information voluntarily, authority to issue a formal notice will be obtained from a senior HMRC officer. A penalty of £300 may be imposed for failure to comply with the notice and appeal arrangements will be available.
Existing powers allow HMRC to collect small underpayments of income tax and capital gains tax, and small overpayments of tax credits, i.e. less than £2,000, by an adjustment to an employed taxpayer’s tax code. The new powers will allow established debts in respect of other taxes to be collected in the same way. A debt will be treated as having been settled at the start of the tax year in which the adjusted tax code applies.
Managed payment plans will only be available to income tax and corporation tax self -assessment taxpayers. The arrangement will allow payments to be made monthly, by Direct Debit or Standing Order, in instalments, during the six months before payment is otherwise due and six months afterwards. If the taxpayer adheres to the payment schedule, no interest or penalties will apply to the payments made after the normal due date. The arrangements will not be available to employers for the payment of PAYE tax.
Draft Regulations: Recovery of Debts under PAYE Regulations
Managed Payment Plans: Draft Guidance
Recovery of Debts under PAYE Regulations: Draft Guidance
Information Powers: Contact Details for Debtors – Draft Guidance
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