Commentary

A4.473 Payments in advance

Administration and compliance

A4.473 Payments in advance

A4.473 Payments in advance

A payment made before any legal obligation exists cannot be treated as a payment under that obligation, and will instead be regarded as a payment made voluntarily. If, however, a sum legally due monthly is in fact paid yearly in advance, it is the practice to allow the actual payment to be treated as fulfilling the obligation. There is rarely any difficulty in deciding at what rate tax is to be deducted in this fairly common example. But the position might be different if a longer advance period were taken, although it is understood that in

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