Revenue weighs credit card option

Taxpayers should receive payment certificates, says report

Taxpayers could pay off tax bills with their credit cards if proposals being discussed get the go-ahead.

The National Audit Office (NAO) has put its weight behind the plan, which is currently being discussed at the Inland Revenue.

The government's auditor also suggests taxpayers should be rewarded with certificates when they pay up on time.

The NAO said the Revenue had improved tax collection, but further work was needed by the department.

It found that a year ago £14bn of tax was outstanding, and £3bn of that debt was more than a year old.

Tax collection

The Revenue collected £219bn in tax and National Insurance contributions in 2002 to 2003, the report said.

Most of the outstanding £14bn at the end of March 2003 was owed by insolvent businesses and by taxpayers who could not be traced.

Sir John Bourn, Comptroller and Auditor General, said: "Much tax is collected quickly but at any one time their are billions of pounds outstanding, some of it long overdue.

"Faster recovery and preventing the build up of debt could bring in money which could be used to improve public services."

Payment methods

The Revenue currently accepts debit card payments through its call centres, and local offices will be able to accept them from the middle of 2005.

INTERNATIONAL COMPARISONS Norway: Late payers must pay a further 4% Ireland: Online filers are allowed an extra three weeks to submit their returns USA: Taxpayers can consult the Internal Revenue Service (IRS) website to see if they qualify for payment arrangements and can calculate monthly instalments to pay off debt USA, Ireland and Norway: Issue tax clearance certificates which can encourage prompt payment

But credit cards are not allowed - partly because of service charges levied by the card provider.

"They are currently exploring the implications of introducing credit card payment and looking at ways of minimising costs to the department," the NAO's report said.

The NAO also called on the Revenue to offer help to consumers with better information about managing debts and said its website should be more consumer friendly.

'In the clear'

As part of the study, researchers visited eight other countries to find out their approaches to tax collection.

The report recommends a number of initiatives which are currently being used by these overseas tax authorities.

Tax authorities in Norway, USA and Ireland issue tax clearance certificates, which confirm that a taxpayer's affairs are in order, to encourage payment on time.

It suggests the Revenue should consider introducing a similar certificate.