A new option for paying tax – available from April 2011
HMRC has announced that its new Managed Payment Plans (MPP) will be launched in April 2011. These plans offer a new way to pay tax by instalments.
MPPs will work as follows. The taxpayer enters into a voluntary agreement with HMRC to spread payments in instalments balanced equally on either side of the statutory due date. Provided the taxpayer sticks to the agreed plan there will be no interest, penalties or surcharges on the instalments paid after the due date. HMRC can refuse to let a taxpayer have an MPP. It is open to self assessment taxpayers, including companies.
The MPP is one of the ideas coming out of the HMRC Powers Review, in which one work strand has been looking at how to encourage payment of tax and improve collection. The legislation which underpins it can be found in s 111, Finance Act 2009.
We were expecting April 2011 to be the start date, as HMRC had previously said that. This will allow time to make the necessary changes to HMRC’s IT systems and also gives plenty of notice to taxpayers.
HMRC says that initially it will only accept payment by direct debit only. In future it may offer a choice of electronic payment methods in the future.