Following on from an initial announcement in the 2009 Finance Bill HMRC recently unveiled plans to launch a new scheme for paying tax liabilities, to be known as the Managed Payment Plan. This will be launched in April 2011, facilitating the payment of tax over 12 equal monthly payments on the 15th of each month spread symmetrically either side of the due date.

The scheme will be available to individual taxpayers paying tax under Self Assessment (both final payments and payments on account) as well as to limited companies paying corporation. It will not be available to Group companies and those subject to quarterly instalment arrangements.

To be eligible for the scheme, taxpayers will have to meet certain conditions:

• The taxpayer has made their self-assessment for the year.
• All previous tax must have been paid or time to pay arrangements must already be in place.
• Payments must be made by direct debit.

To take advantage of a full twelve months payment period, taxpayers will need to complete their self-assessment and propose a plan within the following admittedly tight timetable:

• Taxpayers required to make payments on account on 31 January and 31 July under Self Assessment must have their returns and plans in place by the 31 October
• Taxpayers with just a final payment to make on the 31 January must have their returns and plans in place by the 31 July;  
• Companies paying Corporation Tax must have their returns and plans submitted six months before the normal due date for payment.

Whilst in the plan, taxpayers will not be charged interest or penalties on the instalments paid after the normal due date.

There is a slight sting in the tail if you fall off the scheme due to non-payment. All the payments that are made while the plan is in place will be treated as having been paid on the normal due date, and so those made after the due date will not be liable to interest or penalties. However, if a taxpayer fails to keep to the terms of the plan it will be cancelled. Amounts remaining unpaid at the date will be deemed to be outside of the plan and suffer the normal consequences for late payment with unpaid monies after the due date being liable to late payment interest; additionally they may also attract penalties.

If this payment option appeals and you fell that you or your company may be eligible please call Moore Hill Accountants to discuss it in more detail.