Jeremy Tauri is an associate at Plus Chartered Accountants.
Jeremy Tauri is an associate at Plus Chartered Accountants.
If you're facing a tax bill you're worried you can't pay, you might be feeling pretty stressed.
With the threat of penalties and interest of 8 per cent being added, it can become a bigger problem quite quickly.
The promises from the Government that there would be leniency on taxpayerswho were struggling due to Covid-19 — and, for a while there, that people didn't even need to get in touch with Inland Revenue immediately if they were in trouble — might feel a long time ago.
Now, we're being asked to provide paperwork and bank statements to prove paying is difficult, to negotiate and explain the impact of Covid on a business, and make our case for the kindness we were promised. This has come as a shock to some taxpayers already struggling to focus on their business operations and maintaining work and jobs for staff as well as navigate interpretations to qualify for subsidies and loans.
If you have overdue debt, you'll probably see penalties in your MyIR account. Inland Revenue says it's still open to negotiating and working with people who are in trouble — but you need to email them through MY IR or call them to arrange that and it won't happen automatically.
As with any debt, it's worth doing this as soon as you recognise there might be a problem and before it starts to get out of control.
In many cases, you can agree an instalment plan to get rid of what you owe and reduce the penalties.
Inland Revenue could do more to help people through this Covid-19 disruption with a blanket policy for tax throughout the Covid disruption to remove the extra administration and stress. An offer of an interest free loan at 3 per cent gives with one hand and harshly penalises at 8 per cent plus penalties on the other. In the meantime some taxpayers and their advisers will need to be prepared to make their case for compassion. While you're at it, consider whether you are eligible for the next round of the wage subsidy. Applications for the IRD-administered business loan close on July 24.
