The scheme for special deferral of payment ends on 1 April 2022. How does this affect the provisional assessments for income tax and corporation tax for 2022?
Provisional assessment
Special deferral of payment This applies to all tax due by 31 March 2022 at the latest. Provisional assessments may be paid in a single instalment or in instalments. If paid in a single instalment, the full amount of the assessment must be paid by 28 February 2022 at the latest (the payment discount may then be deducted from the amount of the assessment, but as the rate of collection interest is only 0.01%, this discount will amount to only a very small sum in 2022).
Paying in instalments
The alternative is payment in 11 monthly instalments (with or without a direct debit authorisation), the first of which is due on 28 February 2022. Some of these instalments will then be due after 31 March 2022. The Tax Office states that the Government has decided that all these instalments are covered by the special deferral of payment (provided the business owner has applied for and been granted this deferral). The total provisional tax assessment does not then need to be paid, but will be included in the repayment scheme (repayment in 60 equal monthly instalments starting in October 2022). Faster repayment is, of course, permitted.
Reduce
If the provisional assessment is expected to be too high, a request may be made to the Tax and Customs Administration to reduce the assessment. The tax authorities almost always grant such a request. The main risk of a provisional assessment being too low is that tax interest may be payable on any amount that has to be paid retrospectively. The rate of tax interest is 4% for income tax and 8% for corporation tax.