Why should more of my clients stop paying provisional tax directly to Inland Revenue?
But here’s the uncomfortable and slightly controversial truth: paying Inland Revenue (IR) directly is the least flexible option on the table if your client has the cash and wants to pay their provisional tax on time.
After all, once the funds at IR, they remain there until the income tax return for that period is filed.
Depositing provisional tax into the Tax Traders tax pool, on the other hand, is what many advisers should be encouraging clients to do with 7 May just around the corner.
It’s best practice – unlocking options they simply can’t access when paying IR directly. These include:
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Faster access to refunds (without having to file a return).
- Premium interest on surplus tax.
- The flexibility to swap payments backward and forward.
- Access to affordable working capital via Taxi if cash flow tightens or other expenses arise.
The biggest upside isn’t just for your client
Deposits change the conversation. Instead of using tax pooling retrospectively to correct underpaid tax positions, you’re helping clients stay in control. Late payment penalties are taken off the table before they even become a discussion. And once tax is sitting in the pool, you’ve created opportunities for higher‑value conversations around cash flow, forecasting, funding and growth.
That’s where advisory actually happens.
Yet across the industry, deposit adoption remains low. In many firms, most provisional taxpayers are still encouraged to pay IR directly when they have the funds available.
That means clients are missing out on flexibility, and firms are leaving advisory opportunities on the table.
What’s holding us back?
Often it’s habit. Sometimes it’s the assumption that deposits are ‘extra work’ or only worth it for larger clients. Sometimes it’s the belief that clients won’t see the value.
In practice, once deposits are set up, they’re simple to manage using Tax Traders’ advanced platform – and clients love the optionality.
The real barrier is recommendation. Clients rarely deposit unless their accountant suggests it. It takes two to tango.
Making deposits into the Tax Traders tax pool the default means building them into workflows, conversations and expectations. It also means reframing the message away from interest arbitrage and towards control, peace of mind and choice – especially at a time of heightened economic uncertainty.
So ahead of 7 May, here’s the real question: if your client has the cash, why let it sit with IR instead of depositing funds into the Tax Traders tax pool and keeping their options open?
If you’d like to talk through how deposits could work for your clients ahead of 7 May, our team is happy to help.