Your options during financial difficulty

There are a range of options available for paying amounts due. If you are unable to pay the full amount due on time, you should contact Inland Revnue 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 payment are:

• Payment in full
• An instalment arrangement where you repay an agreed amount over time. See Inland Revenue's Instalment arrangement proposal
• Writing off an agreed amount if Inland Revenue determine that full payment would cause you serious hardship
• A combination of an instalment arrangement and a serious hardship write-off.

Inland Revenue may need further information from you to determine the best options for you.

If you think you can't pay by the due date

Contact Inland Revenue before the due date to let them know about your financial difficulties. Penalties and interest apply to tax bills that are unpaid by the due date but, if your financial situation prevents you from paying on time, they may for example set up an arrangement where you pay the amount owing in instalments. If you contact them 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. If this is your first late payment in a two-year period, you will not use your grace period.

Note that even with an arrangement you are still charged interest 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 Inland Revenue to discuss your payment options, they may need further information from you to determine the best option for you. This may require you to phone Inland Revenue, complete a form or file a return. You will be given a specific timeframe to provide the information that they need. During this time, they 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.

For more information please refer to Inland Revenue's Debt options information sheet (IR592) or part 6 of the Debt options booklet (IR582).

To discuss payment options, please contact the Inland Revenue on freephone 0800 377 771.