What To Do About Issues With Paying Your Tax
A common discussion we’re having with clients recently is that their business is going well and making money but their outgoings are continuing to increase – such as fuel and utility bills and the rising costs associated with employing people. We also hear that cash flow is causing our clients problems, effected by issues such as their invoices not being paid promptly. This means that some are struggling to pay their self-assessment tax, corporate tax and/or VAT bills on time.
While we can certainly help our clients with their business planning and finding strategies to tackle tight cash flow, we can’t approach HMRC on their behalf to talk about any troubles they are having paying their tax bills.
We know that some clients are concerned that, while HMRC was quite understanding about late payments etc during the pandemic, their attitude might have changed. However, if you do have problems and you speak with HMRC, they are usually understanding and will suggest payment plans, known as Time to Pay (TTP) arrangements, to help you manage any tax debts through instalments.
We would usually recommend that you make that phone call as HMRC can’t assist you with your particular situation if they don’t know about it.
Interestingly, HMRC reports that over 90% of its TTP arrangements are completed successfully – which is a positive thought when times seem tough.
A TTP arrangement allows individuals and businesses to spread their tax payments over time. These plans are tailored to your financial situation and can cover various taxes, including Self Assessment, VAT, PAYE and Corporation Tax. They can also include penalties and interest.
Some payment plans can be set up online, without contacting HMRC directly; and you may be eligible to set up a payment plan online if you meet specific criteria:
Self Assessment
You can set up a payment plan online if you:
• Have filed your latest tax return.
• Owe £30,000 or less.
• Are within 60 days of the payment deadline.
• Do not have any other payment plans or debts with HMRC.
PAYE
If you owe tax from PAYE, you can set up a payment plan online if you:
• Have missed the deadline to pay an employer PAYE bill.
• Owe £100,000 or less.
• Plan to pay your debt off within the next 12 months.
• Have debts that are five years old or less.
• Do not have any other payment plans or debts with HMRC.
• Have sent any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due.
VAT
You can set up a payment plan online if you:
• Have missed the deadline to pay a VAT bill.
• Owe £100,000 or less.
• Plan to pay your debt off within the next 12 months.
• Have a debt for an accounting period that started in 2023 or later.
• Do not have any other payment plans or debts with HMRC.
• Have filed all your tax returns.
Interest accrues from the due date, until the debt is fully paid. However, setting up a TTP arrangement can help you avoid or reduce late payment penalties.
TTP plans are flexible; if your financial circumstances change, you could think about increasing your payments if your situation improves or, having had a conversation with HMRC, you could potentially look at reducing them if your situation worsens.
If you’ve got any questions at all, then get in touch on: 01892 513515.