Unless you are a taxpayer who is self-assessing and subject to pay-as-you-go instalments, the general rule is that tax has to be paid within 21 days of receiving a notice of assessment.
The tax office doesn't have to prove its assessments are correct. It is up to the taxpayer to prove one is wrong and they will have to pay at least part of any disputed tax before the authorities decide whether it needs to be paid or not.
The tax office set out the principles underlying its approach in guidelines earlier this year: "If a tax debtor does not pay by the due date and does not contact us, we assume they are not going to pay and take whatever action is necessary to recover the debt."
If a taxpayer believes a debt should not be paid or they can't pay it within 21 days, they should contact the tax office at once, and apply to pay by instalments if need be.
The fact that a taxpayer disputes a debt does not prevent the tax office from collecting the tax. The basic rule is that it will only agree to defer recovery action when it considers a genuine dispute exists and the taxpayer has arranged to pay half the disputed amount. However, it will not grant a deferral if it considers the revenue at risk, or the objection is frivolous or without merit.
Litigating the tax office can be a lengthy and emotionally costly business. As a key to settlement negotiation your solicitor will identify discrete technical issues and try to convince the tax office that it is not going to win them. The tax office doesn't approve of commercial settlements or 'horse trading', unless there is a benefit in doing so over and above the returns that would flow from taking bankruptcy or insolvency action.
With respect to a company, directors may avoid incurring tax debts by initiating its liquidation. As an alternative, a company might simply be deregistered. But this could be false economy. The law provides for reinstatement of a deregistered company where a person has been aggrieved by deregistration.
Further, unsuccessful deregistering or liquidation of a company might in the end cause it to be subject to extra tax penalties and even cause a director to be subject to prosecution.