Having Difficulty Paying Your Taxes?

The deadline for self-assessment passed on 31st January and therefore HMRC will assume that all tax returns have been submitted and tax bills settled. Businesses and individuals that have failed to do so could be liable for additional charges and penalties. However, if you are having difficulty paying your taxes there are a few options available to help you.

Extending the Payment Deadline

It is important to notify HMRC as soon as possible if you realise you won’t be able to settle your tax bill by the deadline. You will then have the opportunity to discuss an alternative payment arrangement.

HMRC usually like to come to an agreement as it means there is a provision for recovering the monies owed. The chances of coming to a satisfactory arrangement will be significantly higher if this conversation is had before the self-assessment deadline. It may still be possible to come to an agreement after the deadline although this can be more difficult and time consuming.

HMRC will not agree to a payment plan without gaining a full understanding of your income, expenses, assets and any savings and investments. You must also present a detailed case of the steps you plan to take to settle your tax bill.
You should have the below information ready before speaking to HMRC:

  • Reference Number
  • A breakdown of what you can settle immediately and the amount you cannot pay. Paying off a larger sum immediately will almost always work in your favour.
  • Time scale to pay off the pending amounts.
  • Steps you plan to take to settle the liability.
  • Any extenuating circumstances.
  • Bank account details.

All the information you provide to HMRC will then be used to determine whether you should pay any amount immediately.

Should HMRC agree to give you more time to pay, they may inquire about your spending habits and earnings of any family members. If due to unforeseen events/circumstances you are unable to pay, make sure HMRC is made aware straight away. Cases in which customers have gone bankrupt or had to pay a sudden and expected medical bill will be handled differently by HMRC as these circumstances were unplanned for.

Voluntarily not paying taxes due

It is good to note that, while there will be late payment fees and fines, HMRC can also take any steps they deem necessary to recover the money from you. HMRC dues must therefore always be given top priority.
Failure to reach a payment agreement with HMRC or failure to pay your liabilities can lead HMRC to;

  • Auction your possessions
  • Take money from bank account
  • Seek legal action
  • Forcefully shut down your company

HMRC do not always follow the list above in that order but they do take whatever action they deem necessary to recover the money owed.