If IRAS appoints your company’s bank as its agent, the bank must pay money it holds for the company to IRAS to settle overdue tax, and in practice the company may be unable to use the account until the tax is paid. IRAS can also appoint tenants, employers, lawyers handling a property sale and other third parties who owe you money. The appointment is released only after the tax and penalties are paid in full. The fastest way out is to pay the overdue amount through IRAS’s own channels and request the release. If full payment is impossible, contact IRAS immediately about a payment plan, and deal with the underlying assessment if you dispute it.
How it happens
IRAS’s corporate tax and GST pages describe the sequence for unpaid tax:
- Tax is due: for corporate tax, one month from the Notice of Assessment; for GST, one month after the end of the accounting period.
- If it is not paid, a 5% late payment penalty is imposed.
- If it remains unpaid 60 days later, additional penalties may follow: 1% a month up to 12% for corporate tax, and 2% a month up to 50% for GST.
- IRAS may appoint agents, such as banks, tenants and lawyers, to recover the tax, and may take legal action. For sole proprietors and partners, IRAS can also issue a Travel Restriction Order preventing them from leaving Singapore until the tax is paid.
Many companies first learn of the problem when the bank account stops working, often because IRAS notices went to an email address nobody checks, or because an estimated assessment was raised for a return that was never filed.
Is this the same as a frozen account?
No. An IRAS agency appointment is a tax collection measure. It is different from an account frozen by the police during a criminal investigation, or by a court order such as a freezing injunction. The way out is different for each. See our guides to a bank account frozen by the police and to a bank account frozen by a court order.
Getting the bank released
- Confirm the amount. Log in to myTax Portal with Corppass and check the company’s account for the tax, penalties and the notices that led to the appointment. Read our guide to checking that IRAS correspondence is genuine if anything looks unusual.
- Pay through IRAS’s channels. Use GIRO, internet banking or AXS with “IRAS” as the payee, or PayNow QR in myTax Portal. Never pay a third-party account.
- Request the release. IRAS says requests made after 12pm on a weekday are processed the next working day, and none are processed on Saturdays, Sundays or public holidays. Pay and request early in the day if payroll or supplier payments depend on the account.
- Fix the cause. File any outstanding returns so that estimated assessments can be revised, and update the company’s notice preferences so notifications reach someone who will act on them.
If the company cannot pay in full
Contact IRAS before the position worsens. IRAS offers payment plans through the Apply/Manage GIRO Plan service in myTax Portal. If a plan is approved, the company must keep to it: if a GIRO deduction fails because of insufficient funds, IRAS cancels the plan and the whole balance becomes payable at once, with possible penalties. Bear in mind that IRAS releases an agent only after full payment, so a plan may not by itself free the account. Ask IRAS what it will accept in your circumstances.
Where the company has wider debts and cannot pay them as they fall due, the directors need to consider the company’s solvency and their own duties. That is a legal question.
If the tax is wrong
If the overdue tax comes from an estimated assessment you disagree with, file the return or an objection within the deadline. Tax must generally be paid even while an objection is pending, and penalties are revised if the assessment is reduced. See how to object to an IRAS estimated assessment. Late payment penalties can be appealed through the Appeal Penalty Waiver service in myTax Portal; IRAS’s conditions include paying the overdue tax in full by the date in the late payment penalty notice.
Example
Example only, not a client case. A small company’s director moved overseas and the company’s IRAS notifications went to a former employee’s email. The company did not file its Form C-S, IRAS raised an estimated assessment, and the tax and 5% penalty went unpaid. Months later the company’s bank account could not be used. The fix was to pay the estimated tax and penalty to secure the release, file the overdue return so the assessment could be revised to the actual figure, and update the company’s notification email. Because the actual tax was lower, IRAS revised the assessment and the penalty and refunded the difference.
Frequently asked questions
Can directors ignore this because the company has a tax agent?
No. IRAS states that the director remains responsible for the company’s filing and payment, even if the tax agent fails to act.
Will IRAS take the money from a director’s personal account?
An agency appointment against the company targets money owed to or held for the company. Sole proprietors and partners are personally liable for their business’s tax, so their own accounts can be affected.
How quickly is the bank released after payment?
IRAS processes release requests on working days, with requests after 12pm handled the next working day.
More on the tax and GST hub.
Bank appointed as IRAS’s agent?
If your company’s bank account has been affected by an IRAS agency appointment, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines, bring the filings up to date, prepare any objection and deal with IRAS. Where your matter needs a lawyer, for example because the company cannot pay its debts, we will refer you to a firm on our panel of Singapore law firms that regularly handles tax recovery and insolvency. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
Kevin Yeo, Raffles Corporate Services