If you can't pay your self-assessment bill to HMRC by January the 31st you should follow our advice and get...
When a company is struggling with its finances, it’s often HMRC who are the first creditor to be out of pocket. Unfortunately, with tax payments tending to be large and no essential business supplies or services being placed on hold if a tax bill is a little late, it can be all too easy to let the taxman wait.
This is, however, exactly the wrong approach to take when struggling to meet tax obligations, whether that be PAYE, VAT or Corporation Tax.
In recent years, where electronic payments are the norm, HMRC are now much faster at spotting and responding when payments are overdue. The best approach to being unable to pay tax when due is to pick up the phone and speak to HMRC direct. Ideally, this should be done before the payment is due rather than after the deadline has been missed.
Before you call, it might be helpful to gather details of your financial circumstances and speak to Lines Henry about putting together a case for being allowed to make repayments via a Time to Pay Arrangement.
What is a Time To Pay Arrangement?
One of the first things you’re likely to notice when you speak to HMRC is how reassuringly ‘human’ they are. Typically the staff who answer the phone are personable and understanding, explain your situation to them honestly and be prepared to answer any questions you’re asked. You may be given the chance to take a TTP or Time to pay arrangement.
A time to pay arrangement is simply an arrangement with HMRC to spread the tax you owe (or are about to owe) over a longer period of time. If you’re permitted to take this option, terms will be agreed and must be strictly adhered to, but so long as you do, HMRC will keep to the arrangement. In this respect, it’s a little like a CVA.
Similar to a CVA, a TTP will oblige you to make repayments over a fixed period and while HMRC will want you to pay as much as possible as soon as possible, it’s important that you don’t make a commitment you can’t keep. However, unlike a CVA, the amount you owe will not be reduced and the whole amount due will still be payable.
Are there any risks applying for a TTP?
While a TTP might be appropriate for strong businesses with temporary cashflow issues, there are no guarantees that you’ll be given time to pay.
There are rules to who is offered a TTP which are, to a greater or lesser extent, based on perceived risk. Indeed, if HMRC believes that your business is heading for insolvency, they may be minded to move faster to recover what is owed to them rather than allowing you an extension.
You should not apply for time to pay as a convenience at HMRC’s expense, there must be a genuine inability to meet your tax bill when due, rather than an attempt to use a TTP to withhold tax money in order to spend it elsewhere.
What if HMRC Decline my TTP Application?
If, for whatever reason, your application to take a TTP arrangement is rejected, there are still options available. These will differ based on your circumstances, but, given that you have a tax bill which is either imminent or overdue, the time to act is now.
Call Lines Henry and arrange for a free consultation and we’ll give you guidance as to what can be done next.
Speak to us, we can help.