What is Tax Pooling and how does it work?

A taxpayer faced with an underpayment can then acquire those surpluses for a fee less than the Inland Revenue debit interest rate. When these surpluses are transferred from the pool to the taxpayer’s Inland Revenue account it is like a transfer from a related party, so Inland Revenue considers it a payment made on time and therefore there is nothing further to pay. Any interest or late payment penalty charges on the taxpayer’s account are usually eliminated at the same time.

Surpluses can be acquired from the pool whether you put tax into the pool or not. Surpluses can only be sold if they’ve been deposited into the pool initially.

Acquisition of additional tax can be done in advance (finance) or after the provisional date (buy), and surplus tax can either be sold over time (sell) or refunded within a matter of days.