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2 June 2017

What happens if you can’t pay your tax on time

Accounting News

Following on from the previous article, we thought readers might be interested in the consequences if they fail to pay their Self Assessment tax on time.

If you are facing cash-flow issues, and cannot see how you can afford to settle part, or all of your tax payment due 31 July 2017, what is the best strategy to avoid confrontation with HMRC and minimise any penalties and interest charges?

Firstly, let’s take a look at penalties. The trigger dates for penalties are 30 days, 6 months and 12 months after the tax became due for payment. On each of these trigger dates you will be charged a 5% penalty based on the amount of tax outstanding.

The current interest charge on unpaid tax is 2.75%.

If you are concerned that you may not be able to meet your liabilities as they fall due, and in particular, any payment due 31 July 2017, we recommend a two-pronged approach.

  • Firstly, make a realistic estimate of when you can settle amounts due. This may be instalments or payment in full at a time after the due date.
  • Secondly, call HMRC’s Business Payment Support Service on 0300 200 3835, and agree an extended payment scheme with them. Generally speaking, they will agree as long as your suggested scheme clears any outstanding liability before your next liabilities become due for payment. They will also exhort you to gather funds such that you can settle future tax on the due dates.

What is inadvisable, is to bury your head in the sand and wait for the brown envelopes, telephone calls and debt collectors at your front door. Call the help line before the tax falls due and keep to your agreed settlement plan.

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16:48 04 Jun 18
I have known Zak for over twenty years during which time he has looked after my tax affairs. He provides a user friendly, efficient but cost effective service whilst successfully resolving issues arising from my tax returns. He also keeps me up to date with progress on any tax relevant issues. I would have no hesitation in recommending The Zak Partnership to anyone.read more
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