APRIL 2016 - Is our client unable to pay their tax?
During these times of austerity, the tax burden on both businesses and indeed, individuals can lead to ‘sleepless’ nights for our clients. If the tax bill is not paid in full by prescribed HMRC dates then interest and further financial penalties are enforced to exacerbate the situation. Is there a workable solution, perhaps a mere glint of light at the end of a ‘very’ dark tunnel?
The answer potentially is yes, but a rapid response is required to achieve the best outcome.
Clients should be encouraged to inform us soon as they are aware that they will be unable to pay for their latest tax bill in full and provide the reasons for this. The earlier we are made aware (preferably in advance of the due date), the more time we have to request a time to pay arrangement with HMRC. If the client has been affected by an unforeseen set of circumstances that has adversely affected cash flow then the Business Payment Support Service can, potentially, be utilised. The service is accessed via telephone ( 0300 200 3835) and prior to making the call, HMRC will need to know some specific details about the client’s business and current financial circumstances in order to make a decision as to whether to agree to a time to pay arrangement for the tax in question.
It’s important to note that a business that has arrears in respect of other taxes is less likely to succeed in securing a time to pay arrangement. Where HMRC is aware of other debts of previous defaults it is likely it will expect immediate payment.
It is important to stress that this service can be contacted at any point during the process but the client may incur additional interest and default surcharges if they request a time to pay arrangement after the tax due date.
So, is there a glimmer of light at the end of the tunnel for our clients, who are struggling to pay their tax bill? Definitely - but the light will shine brighter for those who inform us quickly, prior to the due date as this will give us a better case to put to HMRC for extending the time to pay and alleviate the cash flow burden that can lead to those ‘sleepless’ nights.
If you would like more information or would like to discuss – please click here to get in touch.