Providing IRD with Direct Debit authorities
A recent IRD initiative to introduce Direct Debit payments as an option for paying your GST has received mixed reactions. Some clients want to streamline the payment process within a few clicks of a button whereas other clients want to maintain control over the payments as they fall due.
Our current understanding is that if you select the Direct Debit payment option, and allow the payment details to be saved for future dates, this triggers a process where the IRD will issue their conditions to accept Direct Debits. The conditions include, that notice will be provided at least 10 calendar days prior to payment either in writing or by electronic mail. We also understand that you will need to instruct and authorise each future debit amount as you complete future returns and that the Direct Debit authority at this time only relates to GST.
What we are uncertain and uncomfortable about is the IRD change process being undertaken, and the impact of entering into a Direct Debit arrangement.
Currently the Direct Debit is restricted to GST only, however, as the IRD roll out other tax types onto the myIR system, will these tax types also fall under this Direct Debit or will a new authority be required? If tax debt is owed within other tax types or by associated taxpayers will the IRD use the Direct Debit authority to recover tax debt? If in the event of an incorrect tax assessment, resulting in an incorrect liability, would the IRD use the Direct Debit authority to recover the tax? The questions can be endless and we are not at all confident that the IRD will use the authority as you intended at the time of accepting the conditions.
Our strong preference at this time is that you continue to arrange GST payments by way of cheque or internet banking, that way you remain in control of your financial transactions and you have the certainty of knowing that the payment is in fact correct! If you do choose the Direct Debit option then our advice is to ensure you know at all times what payments are being deducted for what tax types, that you keep up to date with IRD changes around Direct Debit authorities and, if for any reason you are surprised by an IRD action around this method of payment, you contact us immediately. You, as the taxpayer, are ultimately responsible!