Revenue Note for Guidance

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Revenue Note for Guidance

991A Payment of tax by direct debit

An employer may, by agreement, be permitted by the Collector General to pay income tax due by direct debit. The amount of tax paid each month is based on the employer’s best estimate. Any balance of tax outstanding at the end of the year of assessment is due and payable by the “due date”.

Where the total amount of monthly direct debits paid by the employer in a year of assessment is less than 90% of the actual tax due, then the agreement is deemed not to have effect, and the amount of tax due for each month is due and payable by the “due date” for the month.

See section 983 for the definition of “due date”

Details

Definitions

(1) The Collector General may enter into an agreement with an employer permitting the employer to pay the income tax due for each income tax month in a tax year by direct debit where-

  • (a) based on the employer’s best estimate, the total amount paid for the year represents the total amount of tax due for those months,
  • (b) each payment is due on the due date for the month e.g. payment for the month of April 2019 is due and payable by 14 May 2019 or 23 May 2019 where:
    • the return and the remittance are made by electronic means, and
    • the return and the remittance are made on or before the 23 of the month.
  • (c) the employer has complied with all requirements of the Chapter

(2) Subject to subsection (3), where the actual liability in respect of the income tax months contained in the year is greater than the amounts payable under the agreement, the balance is to be included in the payment for December, i.e. payment due by the 14 or 23 January.

(3) Where the total amount of monthly direct debits paid by the employer in a year is less than 90% of the actual tax due, then the agreement is deemed not to have effect, and the amount of tax due for each month is due and payable on the due date for that month.

(4) The Collector General or the employer can terminate the agreement. Where this happens the agreement is deemed not to have taken place.

Relevant Date: Finance Act 2019