WHAT HAPPENS IF YOU CAN’T PAY YOUR SELF ASSESSMENT TAX BILL?

WHAT HAPPENS IF YOU CAN’T PAY YOUR SELF ASSESSMENT TAX BILL?

If you struggle to pay your self-assessment tax bill, all is not lost. You can do things to ease the stress and get things back on track. The first thing you should do is call HMRC and explain the situation. Ignoring the problem and pretending it is not happening could lead to penalties imposed by HMRC, compounding your situation. Ideally, it would be best to speak to them before the deadline, as this allows time to get things in place, but if the deadline has passed, all is not lost, and you may still be able to set up or agree on an instalment plan.

TIME TO PAY ARRANGEMENT

time to pay arrangement with HMRC is where you agree with them that you will pay your tax bill by a specific date or via instalments. You can do this yourself online via your Government Gateway account if:

  • you have filed your latest self-assessment tax return
  • you owe less than £30,000
  • you are within 60 days of the payment deadline
  • you plan to pay back what you owe within the next 12 months or less

Time to pay arrangements are dealt with on a case by case basis, so there are no guarantees you will be accepted. With that in mind, the sooner you contact HMRC and get the ball rolling, the better.

If you do not meet all of the above conditions, you will not be able to set up an instalment payment plan online. However, this does not mean all is lost, and you still could come to an arrangement with HMRC. If this is the case, it is best to call them on 0300 200 3300, and you will need to have the following details to hand:

  • your UTR and National Insurance number
  • your VAT registration number if you are VAT-registered
  • your bank account details
  • details of any previous payments that you have missed

You will probably need to do an income and expenditure report with HMRC, so having your monthly income/expenses to hand is also advisable.

WHAT HAPPENS IF YOU STILL CANNOT PAY?

If you fail to keep to your time to pay arrangement or do not contact HMRC to discuss it, they will impose penalties upon you, which can be more than the original tax amount, and you will still need to pay the tax owed. If you do not pay what is owed in full at this stage, HMRC could involve outside debt collection agencies and impose further late payment fees, interest and debt collection fees. It is imperative to call HMRC at the earliest opportunity to discuss your situation and see if a resolution can be put in place.

PREVENTION IS BETTER THAN THE CURE

The best way to avoid any penalties and issues with your SATR is to prepare for it well in advance. Working with an accountant can help with this as your accounts will be in order, and they can offer advice on how much of your income you should be setting aside each month/week to help you come January 31st. Accountants can also help you reduce your tax bill by enabling you to understand tax legislation and making sure you are making the most of the tax allowances etc.

Here at RJF Accounting, we offer a wide range of services from VAT to payroll and everything in between. If you are struggling with your business’s expenses, why not speak to us today?