Paying sufficient provisional tax comes down to two things:
- Understanding the provisional tax rules and options;
- Proactively calculating what tax is due.
When it comes to paying provisional tax, the easy option is to pay what IRD are expecting which is likely to be based on the previous tax year. Unless we can say every year is the same, then why not base our provisional tax on how we are currently trading! This is how we approach provisional tax for all of our clients.
Contrary to what you might have been told, there are also other options for calculating provisional tax that we use; including tax pooling and the Accounting Income Method. We offer the most appropriate option to each client.