Running a business: Managing your business tax obligations
Planning Ahead
The best way to make your tax payments is to plan ahead for them so you can pay the full amount on time. Our tax calendar can help with your budgeting. You can find this under Important dates in our Work it out section of the website.
To avoid a bill for the whole amount on the due date you can make payments towards your tax bill before then, or you could put money aside in a separate bank account of your own so you earn interest on it up until the date when you pay your bill.
Options for payment
There are a range of options available for paying amounts due. If you are unable to pay the full amount on time, you should contact us as soon as possible. You do not have to wait until the due date for payment has passed.
We will discuss your current circumstances and help you determine the best option for dealing with the amount due. We will look at your current situation, your payment history and your ability to meet future obligations. When looking at your individual case we will follow established guidelines.
Options for payments are:
- Payment in full
- An instalment arrangement where you repay an agreed amount over time
- Writing off an agreed amount if we determine that full payment would cause you serious hardship
- A combination of an instalment arrangement with perhaps some of it written off.
If you think you can't pay by the due date
The best advice is to contact Inland Revenue before the due date to let us know about your financial difficulties. Penalties and interest apply to tax bills that are unpaid by the due date. However, if your financial situation prevents you from paying on time, we may for example set up an arrangement where you pay the amount owing in instalments. If you contact us and make a formal arrangement before the due date, as long as you meet all of your obligations under the arrangement, you will only be charged one late payment penalty of 1%. No further penalties will be charged.
Even with an arrangement you are still charged interest - currently 11.93% - on the tax owing. So you may wish to consider borrowing money from elsewhere so that you can pay the tax bill by the due date.
If the due date has passed and you have an unpaid tax bill
If you make an arrangement after the due date, any penalties already charged will stand. If you meet all of your obligations under the arrangement no further penalties will be charged. However, use of money interest continues to be charged.
Negotiation period
In some instances when you contact us to discuss your payment options, we may need further information from you to determine the best option for you. This may require you to phone us back, complete a form or file a return. You will be given a specific timeframe to provide the information that we need. During this time, we will not impose further late payment penalties or take new debt recovery actions. Late payment penalties and recovery actions will recommence only if a conclusion is not reached before the end of the negotiated timeframe. The use of money interest continues to be charged during the period of negotiation.
More information
For more information about payment options, see our Debt options information sheet (IR592) or the Debt options guide (IR582).
To discuss payment options, please contact us at Inland Revenue on freephone 0800 227 771 or, if you are in business or have a student loan, on freephone 0800 377 771.
Date published: 14 Oct 2004
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