Taxpayers who do not meet their tax obligations may face penalty or interest charges. To avoid such charges, you should pay the full amount of tax you owe by the due date.
The main kinds of charges for failing to meet tax obligations are:
- A shortfall penalty where the correct amount of tax is higher than the amount you paid (eg, because of an understatement of tax, or where the amount of a refund or loss is reduced).
- A late payment penalty if you post or deliver a payment to us after the date it was due.
- A late filing penalty if you do not file a return by the due date.
- Interest on the amount of tax you owe if you have underpaid your tax. The interest rates charged are based on market rates.
- EMS non payment penalties where you file an employer monthly schedule but do not pay the full amount payable on that schedule. These penalties are in addition to any of the other penalties that may also then be payable.
Solutions such as tax pooling can also be used to ease taxpayer concerns and the resulting exposure to use of money interest.
Currently Inland Revenue understand the effect that COVID-19 has had on the income and businesses and the fact that many businesses are facing issues paying current or prior period’s tax. Inland Revenue will consider applications for tax relief and income assistance for businesses that have been affected due to COVID-19.
For more information about tax pooling and your exposure to tax penalties, give us a call.